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	$ 925,000	$ 261,000	$ 410,000	$ 254,000
Variable manufacturing and selling expenses	459,000	110,000	196,000	153,000
Contribution margin	466,000	151,000	214,000	101,000
Fixed expenses:
Advertising, traceable	69,700	8,700	40,300	20,700
Depreciation of special equipment	43,800	20,200	7,800	15,800
Salaries of product-line managers	115,200	41,000	38,100	36,100
Allocated common fixed expenses*	185,000	52,200	82,000	50,800
Total fixed expenses	413,700	122,100	168,200	123,400
Net operating income (loss)	$ 52,300	$ 28,900	$ 45,800	$ (22,400)

*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.