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	$ 927,000	$ 270,000	$ 401,000	$ 256,000
Variable manufacturing and selling expenses	469,000	115,000	203,000	151,000
Contribution margin	458,000	155,000	198,000	105,000
Fixed expenses:
Advertising, traceable	69,700	9,000	40,200	20,500
Depreciation of special equipment	43,100	20,100	7,500	15,500
Salaries of product-line managers	116,500	40,800	38,800	36,900
Allocated common fixed expenses*	185,400	54,000	80,200	51,200
Total fixed expenses	414,700	123,900	166,700	124,100
Net operating income (loss)	$ 43,300	$ 31,100	$ 31,300	$ (19,100)

*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.