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:

TotalDirt BikesMountain BikesRacing BikesSales$ 929,000$ 264,000$ 406,000$ 259,000Variable manufacturing and selling expenses467,000113,000199,000155,000Contribution margin462,000151,000207,000104,000Fixed expenses: Advertising, traceable69,8008,40040,70020,700Depreciation of special equipment43,60020,8007,50015,300Salaries of product-line managers114,70041,00038,50035,200Allocated common fixed expenses*185,80052,80081,20051,800Total fixed expenses413,900123,000167,900123,000Net operating income (loss)$ 48,100$ 28,000$ 39,100$ (19,000)

*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.

im so confused. Please help.