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	$ 926,000	$ 265,000	$ 405,000	$ 256,000
Variable manufacturing and selling expenses	465,000	111,000	204,000	150,000
Contribution margin	461,000	154,000	201,000	106,000
Fixed expenses:
Advertising, traceable	70,300	8,700	40,900	20,700
Depreciation of special equipment	43,600	20,800	7,700	15,100
Salaries of product-line managers	115,200	40,500	38,500	36,200
Allocated common fixed expenses*	185,200	53,000	81,000	51,200
Total fixed expenses	414,300	123,000	168,100	123,200
Net operating income (loss)	$ 46,700	$ 31,000	$ 32,900	$ (17,200)

*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.