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	$ 408,000	$ 252,000
Variable manufacturing and selling expenses	470,000	116,000	196,000	158,000
Contribution margin	456,000	150,000	212,000	94,000
Fixed expenses:
Advertising, traceable	68,700	8,200	40,200	20,300
Depreciation of special equipment	43,500	20,600	7,700	15,200
Salaries of product-line managers	115,600	40,600	38,000	37,000
Allocated common fixed expenses*	185,200	53,200	81,600	50,400
Total fixed expenses	413,000	122,600	167,500	122,900
Net operating income (loss)	$ 43,000	$ 27,400	$ 44,500	$ (28,900)

*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.