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	$ 267,000	$ 408,000	$ 251,000
Variable manufacturing and selling expenses	463,000	113,000	193,000	157,000
Contribution margin	463,000	154,000	215,000	94,000
Fixed expenses:
Advertising, traceable	69,500	8,500	40,500	20,500
Depreciation of special equipment	44,000	20,900	7,900	15,200
Salaries of product-line managers	115,400	40,100	38,900	36,400
Allocated common fixed expenses*	185,200	53,400	81,600	50,200
Total fixed expenses	414,100	122,900	168,900	122,300
Net operating income (loss)	$ 48,900	$ 31,100	$ 46,100	$ (28,300)

*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.