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	$ 929,000	$ 262,000	$ 408,000	$ 259,000
Variable manufacturing and selling expenses	470,000	110,000	205,000	155,000
Contribution margin	459,000	152,000	203,000	104,000
Fixed expenses:
Advertising, traceable	69,500	9,000	40,300	20,200
Depreciation of special equipment	44,500	20,700	7,800	16,000
Salaries of product-line managers	114,400	40,300	38,800	35,300
Allocated common fixed expenses*	185,800	52,400	81,600	51,800
Total fixed expenses	414,200	122,400	168,500	123,300
Net operating income (loss)	$ 44,800	$ 29,600	$ 34,500	$ (19,300)

*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.