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	$ 929,000	$ 269,000	$ 407,000	$ 253,000
Variable manufacturing and selling expenses	464,000	110,000	201,000	153,000
Contribution margin	465,000	159,000	206,000	100,000
Fixed expenses:
Advertising, traceable	70,000	8,900	40,600	20,500
Depreciation of special equipment	43,200	20,300	7,300	15,600
Salaries of product-line managers	115,000	40,400	38,100	36,500
Allocated common fixed expenses*	185,800	53,800	81,400	50,600
Total fixed expenses	414,000	123,400	167,400	123,200
Net operating income (loss)	$ 51,000	$ 35,600	$ 38,600	$ (23,200)

*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.