The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

	Total	Dirt Bikes	Mountain Bikes	Racing Bikes
Sales	$ 926,000	$ 264,000	$ 408,000	$ 254,000
Variable manufacturing and selling expenses	467,000	118,000	198,000	151,000
Contribution margin	459,000	146,000	210,000	103,000
Fixed expenses:
Advertising, traceable	69,700	8,400	40,800	20,500
Depreciation of special equipment	43,500	20,800	7,500	15,200
Salaries of product-line managers	115,700	40,500	39,000	36,200
Allocated common fixed expenses*	185,200	52,800	81,600	50,800
Total fixed expenses	414,100	122,500	168,900	122,700
Net operating income (loss)	$ 44,900	$ 23,500	$ 41,100	$ (19,700)

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Required:

1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

2. Should the production and sale of racing bikes be discontinued?

3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.