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	$ 924,000	$ 265,000	$ 401,000	$ 258,000
Variable manufacturing and selling expenses	465,000	113,000	201,000	151,000
Contribution margin	459,000	152,000	200,000	107,000
Fixed expenses:
Advertising, traceable	69,400	8,700	40,300	20,400
Depreciation of special equipment	43,900	20,300	8,000	15,600
Salaries of product-line managers	115,200	40,700	38,100	36,400
Allocated common fixed expenses*	184,800	53,000	80,200	51,600
Total fixed expenses	413,300	122,700	166,600	124,000
Net operating income (loss)	$ 45,700	$ 29,300	$ 33,400	$ (17,000)

*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.