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	$ 922,000	$ 265,000	$ 406,000	$ 251,000
Variable manufacturing and selling expenses	463,000	115,000	194,000	154,000
Contribution margin	459,000	150,000	212,000	97,000
Fixed expenses:
Advertising, traceable	70,400	8,900	40,500	21,000
Depreciation of special equipment	44,400	20,500	7,900	16,000
Salaries of product-line managers	115,500	40,700	38,900	35,900
Allocated common fixed expenses*	184,400	53,000	81,200	50,200
Total fixed expenses	414,700	123,100	168,500	123,100
Net operating income (loss)	$ 44,300	$ 26,900	$ 43,500	$ (26,100)

*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.