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	$ 922,000	$ 266,000	$ 401,000	$ 255,000
Variable manufacturing and selling expenses	468,000	112,000	204,000	152,000
Contribution margin	454,000	154,000	197,000	103,000
Fixed expenses:
Advertising, traceable	70,100	9,000	40,700	20,400
Depreciation of special equipment	42,900	20,300	7,100	15,500
Salaries of product-line managers	115,200	40,500	38,500	36,200
Allocated common fixed expenses*	184,400	53,200	80,200	51,000
Total fixed expenses	412,600	123,000	166,500	123,100
Net operating income (loss)	$ 41,400	$ 31,000	$ 30,500	$ (20,100)

*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.