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	$ 921,000	$ 267,000	$ 401,000	$ 253,000
Variable manufacturing and selling expenses	476,000	113,000	208,000	155,000
Contribution margin	445,000	154,000	193,000	98,000
Fixed expenses:
Advertising, traceable	69,700	8,300	40,600	20,800
Depreciation of special equipment	42,900	20,300	7,400	15,200
Salaries of product-line managers	115,300	40,300	38,300	36,700
Allocated common fixed expenses*	184,200	53,400	80,200	50,600
Total fixed expenses	412,100	122,300	166,500	123,300
Net operating income (loss)	$ 32,900	$ 31,700	$ 26,500	$ (25,300)

*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.