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	$ 921,000	$ 262,000	$ 402,000	$ 257,000
Variable manufacturing and selling expenses	455,000	111,000	193,000	151,000
Contribution margin	466,000	151,000	209,000	106,000
Fixed expenses:
Advertising, traceable	70,600	8,900	41,000	20,700
Depreciation of special equipment	43,400	20,300	7,600	15,500
Salaries of product-line managers	115,200	40,600	38,800	35,800
Allocated common fixed expenses*	184,200	52,400	80,400	51,400
Total fixed expenses	413,400	122,200	167,800	123,400
Net operating income (loss)	$ 52,600	$ 28,800	$ 41,200	$ (17,400)

*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.

What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Should the production and sale of racing bikes be discontinued? OYes Ono Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-ru profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) 0 0 0 0 Traceable fixed expenses: Total traceable fixed expenses 0 0 0 0 Product line segment margin (loss) 0 $ 0 $ 0 $ 0 Net operating income (loss) $ 0