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	$ 920,000	$ 263,000	$ 405,000	$ 252,000
Variable manufacturing and selling expenses	479,000	112,000	207,000	160,000
Contribution margin	441,000	151,000	198,000	92,000
Fixed expenses:
Advertising, traceable	69,500	8,600	40,400	20,500
Depreciation of special equipment	43,500	20,900	7,200	15,400
Salaries of product-line managers	115,100	40,700	38,200	36,200
Allocated common fixed expenses*	184,000	52,600	81,000	50,400
Total fixed expenses	412,100	122,800	166,800	122,500
Net operating income (loss)	$ 28,900	$ 28,200	$ 31,200	$ (30,500)

*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.