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	$ 923,000	$ 267,000	$ 406,000	$ 250,000
Variable manufacturing and selling expenses	483,000	114,000	210,000	159,000
Contribution margin	440,000	153,000	196,000	91,000
Fixed expenses:
Advertising, traceable	70,100	8,300	41,000	20,800
Depreciation of special equipment	44,200	21,000	7,500	15,700
Salaries of product-line managers	113,800	40,200	38,600	35,000
Allocated common fixed expenses*	184,600	53,400	81,200	50,000
Total fixed expenses	412,700	122,900	168,300	121,500
Net operating income (loss)	$ 27,300	$ 30,100	$ 27,700	$ (30,500)

*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.