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	$ 930,000	$ 265,000	$ 409,000	$ 256,000
Variable manufacturing and selling expenses	474,000	115,000	207,000	152,000
Contribution margin	456,000	150,000	202,000	104,000
Fixed expenses:
Advertising, traceable	69,500	9,000	40,200	20,300
Depreciation of special equipment	43,600	20,400	7,400	15,800
Salaries of product-line managers	114,900	40,700	38,800	35,400
Allocated common fixed expenses*	186,000	53,000	81,800	51,200
Total fixed expenses	414,000	123,100	168,200	122,700
Net operating income (loss)	$ 42,000	$ 26,900	$ 33,800	$ (18,700)

*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. Create a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.