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	$ 270,000	$ 405,000	$ 251,000
Variable manufacturing and selling expenses	481,000	116,000	210,000	155,000
Contribution margin	445,000	154,000	195,000	96,000
Fixed expenses:
Advertising, traceable	70,000	8,500	40,600	20,900
Depreciation of special equipment	43,000	20,400	7,200	15,400
Salaries of product-line managers	114,100	40,100	38,200	35,800
Allocated common fixed expenses*	185,200	54,000	81,000	50,200
Total fixed expenses	412,300	123,000	167,000	122,300
Net operating income (loss)	$ 32,700	$ 31,000	$ 28,000	$ (26,300)

*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.