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	$ 931,000	$ 262,000	$ 409,000	$ 260,000
Variable manufacturing and selling expenses	480,000	119,000	206,000	155,000
Contribution margin	451,000	143,000	203,000	105,000
Fixed expenses:
Advertising, traceable	70,200	9,000	40,600	20,600
Depreciation of special equipment	43,400	20,200	7,800	15,400
Salaries of product-line managers	115,100	41,000	38,800	35,300
Allocated common fixed expenses*	186,200	52,400	81,800	52,000
Total fixed expenses	414,900	122,600	169,000	123,300
Net operating income (loss)	$ 36,100	$ 20,400	$ 34,000	$ (18,300)

*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.