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	$ 928,000	$ 264,000	$ 408,000	$ 256,000
Variable manufacturing and selling expenses	479,000	119,000	203,000	157,000
Contribution margin	449,000	145,000	205,000	99,000
Fixed expenses:
Advertising, traceable	69,700	8,800	40,400	20,500
Depreciation of special equipment	43,900	21,000	7,400	15,500
Salaries of product-line managers	113,800	40,400	38,000	35,400
Allocated common fixed expenses*Footnote asterisk	185,600	52,800	81,600	51,200
Total fixed expenses	413,000	123,000	167,400	122,600
Net operating income (loss)	$ 36,000	$ 22,000	$ 37,600	$ (23,600)

*Footnote asteriskAllocated 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.