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	$ 927,000	$ 266,000	$ 407,000	$ 254,000
Variable manufacturing and selling expenses	474,000	119,000	199,000	156,000
Contribution margin	453,000	147,000	208,000	98,000
Fixed expenses:
Advertising, traceable	69,700	8,500	40,300	20,900
Depreciation of special equipment	44,000	20,600	8,000	15,400
Salaries of product-line managers	114,600	40,300	39,000	35,300
Allocated common fixed expenses*	185,400	53,200	81,400	50,800
Total fixed expenses	413,700	122,600	168,700	122,400
Net operating income (loss)	$ 39,300	$ 24,400	$ 39,300	$ (24,400)

*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.