Sales	$ 927,000	$ 265,000	$ 406,000	$ 256,000
Variable manufacturing and selling expenses	462,000	110,000	192,000	160,000
Contribution margin	465,000	155,000	214,000	96,000
Fixed expenses:
Advertising, traceable	69,000	8,400	40,500	20,100
Depreciation of special equipment	43,800	20,500	7,600	15,700
Salaries of product-line managers	115,700	40,200	38,700	36,800
Allocated common fixed expenses*	185,400	53,000	81,200	51,200
Total fixed expenses	413,900	122,100	168,000	123,800
Net operating income (loss)	$ 51,100	$ 32,900	$ 46,000	$ (27,800)

*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.