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	$ 926,000	$ 264,000	$ 406,000	$ 256,000
Variable manufacturing and selling expenses	469,000	118,000	193,000	158,000
Contribution margin	457,000	146,000	213,000	98,000
Fixed expenses:
Advertising, traceable	69,600	8,700	40,300	20,600
Depreciation of special equipment	43,400	20,300	7,600	15,500
Salaries of product-line managers	115,600	40,400	39,000	36,200
Allocated common fixed expenses*	185,200	52,800	81,200	51,200
Total fixed expenses	413,800	122,200	168,100	123,500
Net operating income (loss)	$ 43,200	$ 23,800	$ 44,900	$ (25,500)

*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.