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	$ 915,000	$ 261,000	$ 404,000	$ 250,000
Variable manufacturing and selling expenses	479,000	117,000	205,000	157,000
Contribution margin	436,000	144,000	199,000	93,000
Fixed expenses:
Advertising, traceable	69,900	8,800	40,200	20,900
Depreciation of special equipment	43,400	20,500	7,200	15,700
Salaries of product-line managers	115,700	40,700	38,100	36,900
Allocated common fixed expenses*	183,000	52,200	80,800	50,000
Total fixed expenses	412,000	122,200	166,300	123,500
Net operating income (loss)	$ 24,000	$ 21,800	$ 32,700	$ (30,500)

*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.