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	$ 265,000	$ 402,000	$ 257,000
Variable manufacturing and selling expenses	471,000	113,000	204,000	154,000
Contribution margin	453,000	152,000	198,000	103,000
Fixed expenses:
Advertising, traceable	69,500	8,200	40,500	20,800
Depreciation of special equipment	43,800	20,400	7,800	15,600
Salaries of product-line managers	114,400	40,200	38,900	35,300
Allocated common fixed expenses*	184,800	53,000	80,400	51,400
Total fixed expenses	412,500	121,800	167,600	123,100
Net operating income (loss)	$ 40,500	$ 30,200	$ 30,400	$ (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.