The Regal Cycle Company manufactures three types of bicycles$$a 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 $ $927,000$ $ $265,000$ $ $407,000$ $ $255,000$

Variable manufacturing and selling expenses $477,000111,000210,000156,000$

Contribution margin $450,000154,000197,00099,000$

Fixed expenses:

Advertising, traceable $69,7008,50040,40020,800$

Depreciation of special equipment $44,60021,0008,00015,600$

Salaries of product$-$line managers $113,90040,50038,10035,300$

Allocated common fixed expenses$*185,40053,00081,40051,000$

Total fixed expenses $413,600123,000167,900122,700$

Net operating income $($loss$)$ $ $36,400$ $ $31,000$ $ $29,100$ $ $(23,700)$

$*$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:

What is the financial advantage $($disadvantage$)$ per quarter of discontinuing the Racing Bikes?

Should the production and sale of racing bikes be discontinued?

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.