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	$ 926,000	$ 267,000	$ 402,000	$ 257,000
Variable manufacturing and selling expenses	483,000	119,000	205,000	159,000
Contribution margin	443,000	148,000	197,000	98,000
Fixed expenses:
Advertising, traceable	69,400	8,300	40,300	20,800
Depreciation of special equipment	43,700	20,700	7,200	15,800
Salaries of product-line managers	115,600	40,700	39,000	35,900
Allocated common fixed expenses*	185,200	53,400	80,400	51,400
Total fixed expenses	413,900	123,100	166,900	123,900
Net operating income (loss)	$ 29,100	$ 24,900	$ 30,100	$ (25,900)

*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.