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	$ 262,000	$ 405,000	$ 254,000
Variable manufacturing and selling expenses	468,000	113,000	198,000	157,000
Contribution margin	453,000	149,000	207,000	97,000
Fixed expenses:
Advertising, traceable	69,400	8,600	40,700	20,100
Depreciation of special equipment	43,600	20,400	7,700	15,500
Salaries of product-line managers	114,100	40,100	38,400	35,600
Allocated common fixed expenses*	184,200	52,400	81,000	50,800
Total fixed expenses	411,300	121,500	167,800	122,000
Net operating income (loss)	$ 41,700	$ 27,500	$ 39,200	$ (25,000)

*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.