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	$ 919,000	$ 267,000	$ 402,000	$ 250,000
Variable manufacturing and selling expenses	459,000	111,000	192,000	156,000
Contribution margin	460,000	156,000	210,000	94,000
Fixed expenses:
Advertising, traceable	69,400	8,200	40,600	20,600
Depreciation of special equipment	43,000	20,200	7,600	15,200
Salaries of product-line managers	114,500	40,600	38,200	35,700
Allocated common fixed expenses*	183,800	53,400	80,400	50,000
Total fixed expenses	410,700	122,400	166,800	121,500
Net operating income (loss)	$ 49,300	$ 33,600	$ 43,200	$ (27,500)

*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.