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	$ 932,000	$ 264,000	$ 409,000	$ 259,000
Variable manufacturing and selling expenses	476,000	114,000	204,000	158,000
Contribution margin	456,000	150,000	205,000	101,000
Fixed expenses:
Advertising, traceable	69,400	8,900	40,300	20,200
Depreciation of special equipment	42,700	20,400	7,100	15,200
Salaries of product-line managers	116,100	40,600	38,700	36,800
Allocated common fixed expenses*	186,400	52,800	81,800	51,800
Total fixed expenses	414,600	122,700	167,900	124,000
Net operating income (loss)	$ 41,400	$ 27,300	$ 37,100	$ (23,000)

*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.