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	$ 265,000	$ 409,000	$ 252,000
Variable manufacturing and selling expenses	475,000	117,000	206,000	152,000
Contribution margin	451,000	148,000	203,000	100,000
Fixed expenses:
Advertising, traceable	69,200	8,300	40,400	20,500
Depreciation of special equipment	43,700	20,300	7,600	15,800
Salaries of product-line managers	113,600	40,100	38,400	35,100
Allocated common fixed expenses*	185,200	53,000	81,800	50,400
Total fixed expenses	411,700	121,700	168,200	121,800
Net operating income (loss)	$ 39,300	$ 26,300	$ 34,800	$ (21,800)

*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.