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	$ 922,000	$ 262,000	$ 406,000	$ 254,000
Variable manufacturing and selling expenses	470,000	111,000	205,000	154,000
Contribution margin	452,000	151,000	201,000	100,000
Fixed expenses:
Advertising, traceable	69,100	8,600	40,200	20,300
Depreciation of special equipment	43,500	20,300	7,400	15,800
Salaries of product-line managers	114,800	40,200	38,200	36,400
Allocated common fixed expenses*	184,400	52,400	81,200	50,800
Total fixed expenses	411,800	121,500	167,000	123,300
Net operating income (loss)	$ 40,200	$ 29,500	$ 34,000	$ (23,300)

*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.