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	$ 300,000	$ 90,000	$ 150,000	$ 60,000
Variable manufacturing and selling expenses	120,000	27,000	60,000	33,000
Contribution margin	180,000	63,000	90,000	27,000
Fixed expenses:
Advertising, traceable	30,000	10,000	14,000	6,000
Depreciation of special equipment	23,000	6,000	9,000	8,000
Salaries of product-line managers	35,000	12,000	13,000	10,000
Allocated common fixed expenses*	60,000	18,000	30,000	12,000
Total fixed expenses	148,000	46,000	66,000	36,000
Net operating income (loss)	$ 32,000	$ 17,000	$ 24,000	$ (9,000)

*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.