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	$ 932,000	$ 268,000	$ 409,000	$ 255,000
Variable manufacturing and selling expenses	467,000	112,000	202,000	153,000
Contribution margin	465,000	156,000	207,000	102,000
Fixed expenses:
Advertising, traceable	70,100	8,900	40,400	20,800
Depreciation of special equipment	43,800	20,500	7,600	15,700
Salaries of product-line managers	116,400	40,700	38,900	36,800
Allocated common fixed expenses*	186,400	53,600	81,800	51,000
Total fixed expenses	416,700	123,700	168,700	124,300
Net operating income (loss)	$ 48,300	$ 32,300	$ 38,300	$ (22,300)

*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.