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	$ 928,000	$ 267,000	$ 410,000	$ 251,000
Variable manufacturing and selling expenses	468,000	115,000	202,000	151,000
Contribution margin	460,000	152,000	208,000	100,000
Fixed expenses:
Advertising, traceable	69,600	8,300	40,500	20,800
Depreciation of special equipment	43,200	20,600	7,400	15,200
Salaries of product-line managers	114,600	40,400	38,700	35,500
Allocated common fixed expenses*	185,600	53,400	82,000	50,200
Total fixed expenses	413,000	122,700	168,600	121,700
Net operating income (loss)	$ 47,000	$ 29,300	$ 39,400	$ (21,700)

*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.