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	$ 923,000	$ 264,000	$ 403,000	$ 256,000
Variable manufacturing and selling expenses	468,000	111,000	206,000	151,000
Contribution margin	455,000	153,000	197,000	105,000
Fixed expenses:
Advertising, traceable	69,900	8,700	40,700	20,500
Depreciation of special equipment	43,300	20,300	7,500	15,500
Salaries of product-line managers	114,700	40,300	38,300	36,100
Allocated common fixed expenses*	184,600	52,800	80,600	51,200
Total fixed expenses	412,500	122,100	167,100	123,300
Net operating income (loss)	$ 42,500	$ 30,900	$ 29,900	$ (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.