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	$ 930,000	$ 265,000	$ 406,000	$ 259,000
Variable manufacturing and selling expenses	481,000	116,000	205,000	160,000
Contribution margin	449,000	149,000	201,000	99,000
Fixed expenses:
Advertising, traceable	69,300	8,300	40,300	20,700
Depreciation of special equipment	43,500	21,000	7,100	15,400
Salaries of product-line managers	113,600	40,300	38,100	35,200
Allocated common fixed expenses*	186,000	53,000	81,200	51,800
Total fixed expenses	412,400	122,600	166,700	123,100
Net operating income (loss)	$ 36,600	$ 26,400	$ 34,300	$ (24,100)

*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.