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	$ 924,000	$ 262,000	$ 406,000	$ 256,000
Variable manufacturing and selling expenses	468,000	116,000	199,000	153,000
Contribution margin	456,000	146,000	207,000	103,000
Fixed expenses:
Advertising, traceable	69,200	8,700	40,300	20,200
Depreciation of special equipment	44,400	20,700	8,000	15,700
Salaries of product-line managers	115,500	40,900	38,100	36,500
Allocated common fixed expenses*	184,800	52,400	81,200	51,200
Total fixed expenses	413,900	122,700	167,600	123,600
Net operating income (loss)	$ 42,100	$ 23,300	$ 39,400	$ (20,600)

*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.