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	$ 922,000	$ 265,000	$ 401,000	$ 256,000
Variable manufacturing and selling expenses	477,000	117,000	208,000	152,000
Contribution margin	445,000	148,000	193,000	104,000
Fixed expenses:
Advertising, traceable	70,100	8,600	40,800	20,700
Depreciation of special equipment	43,900	20,600	7,600	15,700
Salaries of product-line managers	114,000	40,200	38,500	35,300
Allocated common fixed expenses*	184,400	53,000	80,200	51,200
Total fixed expenses	412,400	122,400	167,100	122,900
Net operating income (loss)	$ 32,600	$ 25,600	$ 25,900	$ (18,900)

*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.