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	$	924,000		$	268,000		$	401,000		$	255,000
Variable manufacturing and selling expenses		476,000			112,000			208,000			156,000
Contribution margin		448,000			156,000			193,000			99,000
Fixed expenses:
Advertising, traceable		69,300			8,100			40,600			20,600
Depreciation of special equipment		43,800			20,200			7,900			15,700
Salaries of product-line managers		114,500			40,800			38,400			35,300
Allocated common fixed expenses*		184,800			53,600			80,200			51,000
Total fixed expenses		412,400			122,700			167,100			122,600
Net operating income (loss)	$	35,600		$	33,300		$	25,900		$	(23,600)

*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?

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
Contribution margin (loss)	0	0	0	0
Traceable fixed expenses:
Total traceable fixed expenses	0	0	0	0
	0	$0	$0	$0
Net operating income (loss)	$0