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	$ 265,000	$ 409,000	$ 251,000
Variable manufacturing and selling expenses	473,000	111,000	210,000	152,000
Contribution margin	452,000	154,000	199,000	99,000
Fixed expenses:
Advertising, traceable	69,700	8,800	40,400	20,500
Depreciation of special equipment	43,900	20,600	7,500	15,800
Salaries of product-line managers	115,500	40,900	38,300	36,300
Allocated common fixed expenses*	185,000	53,000	81,800	50,200
Total fixed expenses	414,100	123,300	168,000	122,800
Net operating income (loss)	$ 37,900	$ 30,700	$ 31,000	$ (23,800)

*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.