The LMNO 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: PLEASE HELP FILL IN LAST CHART

Sales	$ 923,000	$ 262,000	$ 409,000	$ 252,000
Variable manufacturing and selling expenses	479,000	112,000	209,000	158,000
Contribution margin	444,000	150,000	200,000	94,000
Fixed expenses:
Advertising, traceable	69,200	8,200	40,600	20,400
Depreciation of special equipment	44,100	20,800	7,700	15,600
Salaries of product-line managers	114,500	40,400	38,800	35,300
Allocated common fixed expenses*	184,600	52,400	81,800	50,400
Total fixed expenses	412,400	121,800	168,900	121,700
Net operating income (loss)	$ 31,600	$ 28,200	$ 31,100	$ (27,700)

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.

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.

	Totals	Dirt Bikes	Mountain Bikes	Racing Bikes
Sales	$923,000	$262,000	$409,000	$252,000
Variable manufacturing and selling expenses
Contribution margin (loss)	923,000	262,000	409,000	252,000
Traceable fixed expenses:
Advertising, traceable
Depreciation of special equipment
Salaries of the product line managers
Total traceable fixed expenses	0	0	0	0
Product line segment margin (loss)	923,000	$262,000	$409,000	$252,000
Common fixed expenses
Net operating income (loss)	$923,000