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	$ 928,000	$ 264,000	$ 408,000	$ 256,000
Variable manufacturing and selling expenses	459,000	114,000	195,000	150,000
Contribution margin	469,000	150,000	213,000	106,000
Fixed expenses:
Advertising, traceable	69,800	8,900	40,700	20,200
Depreciation of special equipment	44,000	20,900	7,500	15,600
Salaries of product-line managers	115,000	40,700	38,000	36,300
Allocated common fixed expenses*	185,600	52,800	81,600	51,200
Total fixed expenses	414,400	123,300	167,800	123,300
Net operating income (loss)	$ 54,600	$ 26,700	$ 45,200	$ (17,300)

*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.