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	$ 925,000	$ 263,000	$ 407,000	$ 255,000
Variable manufacturing and selling expenses	469,000	112,000	198,000	159,000
Contribution margin	456,000	151,000	209,000	96,000
Fixed expenses:
Advertising, traceable	69,600	8,400	40,800	20,400
Depreciation of special equipment	43,900	20,400	7,600	15,900
Salaries of product-line managers	114,400	41,000	38,300	35,100
Allocated common fixed expenses*	185,000	52,600	81,400	51,000
Total fixed expenses	412,900	122,400	168,100	122,400
Net operating income (loss)	$ 43,100	$ 28,600	$ 40,900	$ (26,400)

*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.