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	$ 924,000	$ 264,000	$ 407,000	$ 253,000
Variable manufacturing and selling expenses	479,000	116,000	209,000	154,000
Contribution margin	445,000	148,000	198,000	99,000
Fixed expenses:
Advertising, traceable	69,700	8,500	40,900	20,300
Depreciation of special equipment	44,100	21,000	7,900	15,200
Salaries of product-line managers	115,600	40,900	38,500	36,200
Allocated common fixed expenses*	184,800	52,800	81,400	50,600
Total fixed expenses	414,200	123,200	168,700	122,300
Net operating income (loss)	$ 30,800	$ 24,800	$ 29,300	$ (23,300)

*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.