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		$	264,000		$	402,000		$	255,000
Variable manufacturing and selling expenses		475,000			112,000			209,000			154,000
Contribution margin		446,000			152,000			193,000			101,000
Fixed expenses:
Advertising, traceable		69,500			8,800			40,300			20,400
Depreciation of special equipment		44,000			20,600			7,800			15,600
Salaries of product-line managers		115,100			40,700			38,200			36,200
Allocated common fixed expenses*		184,200			52,800			80,400			51,000
Total fixed expenses		412,800			122,900			166,700			123,200
Net operating income (loss)	$	33,200		$	29,100		$	26,300		$	(22,200)

*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.

These are the options for the left side for the required 3

What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required2 > Financial (disadvantage) per quarter Financial advantage per quarter