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	$ 265,000	$ 409,000	$ 253,000
Variable manufacturing and selling expenses	468,000	113,000	198,000	157,000
Contribution margin	459,000	152,000	211,000	96,000
Fixed expenses:
Advertising, traceable	69,900	9,000	40,400	20,500
Depreciation of special equipment	43,900	20,800	7,500	15,600
Salaries of product-line managers	115,200	40,100	39,000	36,100
Allocated common fixed expenses*	185,400	53,000	81,800	50,600
Total fixed expenses	414,400	122,900	168,700	122,800
Net operating income (loss)	$ 44,600	$ 29,100	$ 42,300	$ (26,800)

*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.