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	$ 920,000	$ 265,000	$ 400,000	$ 255,000
Variable manufacturing and selling expenses	465,000	112,000	203,000	150,000
Contribution margin	455,000	153,000	197,000	105,000
Fixed expenses:
Advertising, traceable	69,700	9,000	40,400	20,300
Depreciation of special equipment	42,900	20,400	7,200	15,300
Salaries of product-line managers	115,400	40,300	38,600	36,500
Allocated common fixed expenses*	184,000	53,000	80,000	51,000
Total fixed expenses	412,000	122,700	166,200	123,100
Net operating income (loss)	$ 43,000	$ 30,300	$ 30,800	$ (18,100)

*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.