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	$ 928,000	$ 265,000	$ 406,000	$ 257,000
Variable manufacturing and selling expenses	469,000	119,000	199,000	151,000
Contribution margin	459,000	146,000	207,000	106,000
Fixed expenses:
Advertising, traceable	70,200	8,900	40,700	20,600
Depreciation of special equipment	44,600	21,000	7,800	15,800
Salaries of product-line managers	116,300	40,600	38,900	36,800
Allocated common fixed expenses*	185,600	53,000	81,200	51,400
Total fixed expenses	416,700	123,500	168,600	124,600
Net operating income (loss)	$ 42,300	$ 22,500	$ 38,400	$ (18,600)

*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.