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	$ 926,000	$ 266,000	$ 405,000	$ 255,000
Variable manufacturing and selling expenses	483,000	116,000	208,000	159,000
Contribution margin	443,000	150,000	197,000	96,000
Fixed expenses:
Advertising, traceable	69,800	8,900	40,200	20,700
Depreciation of special equipment	43,500	20,800	7,200	15,500
Salaries of product-line managers	115,000	40,100	38,300	36,600
Allocated common fixed expenses*	185,200	53,200	81,000	51,000
Total fixed expenses	413,500	123,000	166,700	123,800
Net operating income (loss)	$ 29,500	$ 27,000	$ 30,300	$ (27,800)

*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.