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	$ 925,000	$ 268,000	$ 407,000	$ 250,000
Variable manufacturing and selling expenses	453,000	112,000	191,000	150,000
Contribution margin	472,000	156,000	216,000	100,000
Fixed expenses:
Advertising, traceable	69,700	8,400	40,400	20,900
Depreciation of special equipment	43,300	20,400	7,300	15,600
Salaries of product-line managers	115,200	40,400	38,100	36,700
Allocated common fixed expenses*	185,000	53,600	81,400	50,000
Total fixed expenses	413,200	122,800	167,200	123,200
Net operating income (loss)	$ 58,800	$ 33,200	$ 48,800	$ (23,200)

*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.