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	$ 917,000	$ 262,000	$ 403,000	$ 252,000
Variable manufacturing and selling expenses	471,000	120,000	200,000	151,000
Contribution margin	446,000	142,000	203,000	101,000
Fixed expenses:
Advertising, traceable	70,100	8,900	40,800	20,400
Depreciation of special equipment	44,000	20,700	7,900	15,400
Salaries of product-line managers	115,900	40,200	39,000	36,700
Allocated common fixed expenses*	183,400	52,400	80,600	50,400
Total fixed expenses	413,400	122,200	168,300	122,900
Net operating income (loss)	$ 32,600	$ 19,800	$ 34,700	$ (21,900)

*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.