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	$ 916,000	$ 262,000	$ 402,000	$ 252,000
Variable manufacturing and selling expenses	462,000	112,000	195,000	155,000
Contribution margin	454,000	150,000	207,000	97,000
Fixed expenses:
Advertising, traceable	69,700	8,900	40,100	20,700
Depreciation of special equipment	42,900	20,500	7,100	15,300
Salaries of product-line managers	114,800	40,500	38,400	35,900
Allocated common fixed expenses*	183,200	52,400	80,400	50,400
Total fixed expenses	410,600	122,300	166,000	122,300
Net operating income (loss)	$ 43,400	$ 27,700	$ 41,000	$ (25,300)

*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.