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	$ 268,000	$ 408,000	$ 252,000
Variable manufacturing and selling expenses	473,000	112,000	207,000	154,000
Contribution margin	455,000	156,000	201,000	98,000
Fixed expenses:
Advertising, traceable	69,100	8,100	40,500	20,500
Depreciation of special equipment	43,800	20,600	7,300	15,900
Salaries of product-line managers	114,400	40,600	38,000	35,800
Allocated common fixed expenses*	185,600	53,600	81,600	50,400
Total fixed expenses	412,900	122,900	167,400	122,600
Net operating income (loss)	$ 42,100	$ 33,100	$ 33,600	$ (24,600)

*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.