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	$ 925,000	$ 264,000	$ 407,000	$ 254,000
Variable manufacturing and selling expenses	480,000	114,000	206,000	160,000
Contribution margin	445,000	150,000	201,000	94,000
Fixed expenses:
Advertising, traceable	68,800	8,100	40,300	20,400
Depreciation of special equipment	43,600	20,400	7,900	15,300
Salaries of product-line managers	115,400	40,600	38,800	36,000
Allocated common fixed expenses*	185,000	52,800	81,400	50,800
Total fixed expenses	412,800	121,900	168,400	122,500
Net operating income (loss)	$ 32,200	$ 28,100	$ 32,600	$ (28,500)

*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.

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-ri orofitability of the various product lines. Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 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-r rofitability of the various product lines. Complete this question by entering your answers in the tabs below. Should the production and sale of racing bikes be discontinued? Complete this question by entering your answers in the tabs below. 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