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		$	262,000		$	407,000		$	256,000
Variable manufacturing and selling expenses		473,000			113,000			209,000			151,000
Contribution margin		452,000			149,000			198,000			105,000
Fixed expenses:
Advertising, traceable		69,900			8,500			40,500			20,900
Depreciation of special equipment		43,100			20,200			7,700			15,200
Salaries of product-line managers		114,600			40,500			38,200			35,900
Allocated common fixed expenses*		185,000			52,400			81,400			51,200
Total fixed expenses		412,600			121,600			167,800			123,200
Net operating income (loss)	$	39,400		$	27,400		$	30,200		$	(18,200)

*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 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial (disadvantage) per quarter Required 1 Required 2 Required 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. 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) $ $ O