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	$ 924,000	$ 265,000	$ 405,000	$ 254,000
Variable manufacturing and selling expenses	466,000	118,000	195,000	153,000
Contribution margin	458,000	147,000	210,000	101,000
Fixed expenses:
Advertising, traceable	70,100	8,800	40,500	20,800
Depreciation of special equipment	43,400	20,100	7,500	15,800
Salaries of product-line managers	113,900	40,000	38,600	35,300
Allocated common fixed expenses*	184,800	53,000	81,000	50,800
Total fixed expenses	412,200	121,900	167,600	122,700
Net operating income (loss)	$ 45,800	$ 25,100	$ 42,400	$ (21,700)

*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.