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	$ 923,000	$ 266,000	$ 402,000	$ 255,000
Variable manufacturing and selling expenses	466,000	116,000	194,000	156,000
Contribution margin	457,000	150,000	208,000	99,000
Fixed expenses:
Advertising, traceable	69,800	8,700	40,500	20,600
Depreciation of special equipment	43,300	20,900	7,200	15,200
Salaries of product-line managers	114,900	40,400	38,300	36,200
Allocated common fixed expenses*	184,600	53,200	80,400	51,000
Total fixed expenses	412,600	123,200	166,400	123,000
Net operating income (loss)	$ 44,400	$ 26,800	$ 41,600	$ (24,000)

*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.