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	$ 920,000	$ 264,000	$ 400,000	$ 256,000
Variable manufacturing and selling expenses	472,000	117,000	198,000	157,000
Contribution margin	448,000	147,000	202,000	99,000
Fixed expenses:
Advertising, traceable	70,200	8,500	40,900	20,800
Depreciation of special equipment	43,600	20,700	7,700	15,200
Salaries of product-line managers	115,400	40,400	38,200	36,800
Allocated common fixed expenses*	184,000	52,800	80,000	51,200
Total fixed expenses	413,200	122,400	166,800	124,000
Net operating income (loss)	$ 34,800	$ 24,600	$ 35,200	$ (25,000)

*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.