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	$ 924,000	$ 266,000	$ 405,000	$ 253,000
Variable manufacturing and selling expenses	475,000	112,000	206,000	157,000
Contribution margin	449,000	154,000	199,000	96,000
Fixed expenses:
Advertising, traceable	69,600	8,200	40,700	20,700
Depreciation of special equipment	44,300	20,700	7,600	16,000
Salaries of product-line managers	115,200	40,300	38,800	36,100
Allocated common fixed expenses*	184,800	53,200	81,000	50,600
Total fixed expenses	413,900	122,400	168,100	123,400
Net operating income (loss)	$ 35,100	$ 31,600	$ 30,900	$ (27,400)

*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.