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	$ 264,000	$ 407,000	$ 251,000
Variable manufacturing and selling expenses	484,000	118,000	206,000	160,000
Contribution margin	438,000	146,000	201,000	91,000
Fixed expenses:
Advertising, traceable	69,600	8,700	40,800	20,100
Depreciation of special equipment	43,400	20,500	7,100	15,800
Salaries of product-line managers	115,000	40,400	38,800	35,800
Allocated common fixed expenses*	184,400	52,800	81,400	50,200
Total fixed expenses	412,400	122,400	168,100	121,900
Net operating income (loss)	$ 25,600	$ 23,600	$ 32,900	$ (30,900)

*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.