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	$ 925,000	$ 263,000	$ 409,000	$ 253,000
Variable manufacturing and selling expenses	472,000	116,000	203,000	153,000
Contribution margin	453,000	147,000	206,000	100,000
Fixed expenses:
Advertising, traceable	69,200	8,300	40,400	20,500
Depreciation of special equipment	43,500	20,900	7,400	15,200
Salaries of product-line managers	114,900	40,200	38,700	36,000
Allocated common fixed expenses*	185,000	52,600	81,800	50,600
Total fixed expenses	412,600	122,000	168,300	122,300
Net operating income (loss)	$ 40,400	$ 25,000	$ 37,700	$ (22,300)

*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.