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	$ 927,000	$ 269,000	$ 405,000	$ 253,000
Variable manufacturing and selling expenses	478,000	110,000	208,000	160,000
Contribution margin	449,000	159,000	197,000	93,000
Fixed expenses:
Advertising, traceable	69,800	8,500	40,300	21,000
Depreciation of special equipment	44,300	20,800	7,600	15,900
Salaries of product-line managers	115,200	40,300	38,500	36,400
Allocated common fixed expenses*Footnote asterisk	185,400	53,800	81,000	50,600
Total fixed expenses	414,700	123,400	167,400	123,900
Net operating income (loss)	$ 34,300	$ 35,600	$ 29,600	$ (30,900)

*Footnote asteriskAllocated 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.