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	$ 918,000	$ 266,000	$ 401,000	$ 251,000
Variable manufacturing and selling expenses	468,000	114,000	200,000	154,000
Contribution margin	450,000	152,000	201,000	97,000
Fixed expenses:
Advertising, traceable	69,900	9,000	40,300	20,600
Depreciation of special equipment	43,600	20,800	7,600	15,200
Salaries of product-line managers	116,200	40,400	38,900	36,900
Allocated common fixed expenses*	183,600	53,200	80,200	50,200
Total fixed expenses	413,300	123,400	167,000	122,900
Net operating income (loss)	$ 36,700	$ 28,600	$ 34,000	$ (25,900)

*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.