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	$ 406,000	$ 251,000
Variable manufacturing and selling expenses	462,000	112,000	198,000	152,000
Contribution margin	461,000	154,000	208,000	99,000
Fixed expenses:
Advertising, traceable	70,100	8,900	40,600	20,600
Depreciation of special equipment	44,400	20,900	7,800	15,700
Salaries of product-line managers	116,500	41,000	38,900	36,600
Allocated common fixed expenses*	184,600	53,200	81,200	50,200
Total fixed expenses	415,600	124,000	168,500	123,100
Net operating income (loss)	$ 45,400	$ 30,000	$ 39,500	$ (24,100)

*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.