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	$ 266,000	$ 404,000	$ 252,000
Variable manufacturing and selling expenses	475,000	118,000	202,000	155,000
Contribution margin	447,000	148,000	202,000	97,000
Fixed expenses:
Advertising, traceable	69,600	8,500	40,800	20,300
Depreciation of special equipment	44,500	20,900	8,000	15,600
Salaries of product-line managers	114,200	40,200	38,900	35,100
Allocated common fixed expenses*	184,400	53,200	80,800	50,400
Total fixed expenses	412,700	122,800	168,500	121,400
Net operating income (loss)	$ 34,300	$ 25,200	$ 33,500	$ (24,400)

*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.