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	$ 266,000	$ 403,000	$ 257,000
Variable manufacturing and selling expenses	472,000	119,000	194,000	159,000
Contribution margin	454,000	147,000	209,000	98,000
Fixed expenses:
Advertising, traceable	69,300	8,400	40,400	20,500
Depreciation of special equipment	43,000	20,600	7,200	15,200
Salaries of product-line managers	116,100	40,800	38,900	36,400
Allocated common fixed expenses*	185,200	53,200	80,600	51,400
Total fixed expenses	413,600	123,000	167,100	123,500
Net operating income (loss)	$ 40,400	$ 24,000	$ 41,900	$ (25,500)

*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.