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	$ 928,000	$ 262,000	$ 409,000	$ 257,000
Variable manufacturing and selling expenses	482,000	120,000	207,000	155,000
Contribution margin	446,000	142,000	202,000	102,000
Fixed expenses:
Advertising, traceable	68,800	8,300	40,100	20,400
Depreciation of special equipment	43,900	20,300	7,900	15,700
Salaries of product-line managers	115,300	40,400	38,400	36,500
Allocated common fixed expenses*	185,600	52,400	81,800	51,400
Total fixed expenses	413,600	121,400	168,200	124,000
Net operating income (loss)	$ 32,400	$ 20,600	$ 33,800	$ (22,000)

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.