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	$ 924,000	$ 265,000	$ 400,000	$ 259,000
Variable manufacturing and selling expenses	464,000	110,000	197,000	157,000
Contribution margin	460,000	155,000	203,000	102,000
Fixed expenses:
Advertising, traceable	69,600	8,100	40,800	20,700
Depreciation of special equipment	43,100	20,400	7,300	15,400
Salaries of product-line managers	115,100	40,200	38,700	36,200
Allocated common fixed expenses*	184,800	53,000	80,000	51,800
Total fixed expenses	412,600	121,700	166,800	124,100
Net operating income (loss)	$ 47,400	$ 33,300	$ 36,200	$ (22,100)

*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.