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	$ 269,000	$ 409,000	$ 251,000
Variable manufacturing and selling expenses	478,000	119,000	208,000	151,000
Contribution margin	451,000	150,000	201,000	100,000
Fixed expenses:
Advertising, traceable	69,800	8,900	40,700	20,200
Depreciation of special equipment	44,000	20,700	7,400	15,900
Salaries of product-line managers	114,900	40,200	38,100	36,600
Allocated common fixed expenses*	185,800	53,800	81,800	50,200
Total fixed expenses	414,500	123,600	168,000	122,900
Net operating income (loss)	$ 36,500	$ 26,400	$ 33,000	$ (22,900)

*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.