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	$ 928,000	$ 263,000	$ 405,000	$ 260,000
Variable manufacturing and selling expenses	455,000	110,000	193,000	152,000
Contribution margin	473,000	153,000	212,000	108,000
Fixed expenses:
Advertising, traceable	70,000	8,800	40,400	20,800
Depreciation of special equipment	43,800	20,500	7,800	15,500
Salaries of product-line managers	114,300	40,200	38,900	35,200
Allocated common fixed expenses*	185,600	52,600	81,000	52,000
Total fixed expenses	413,700	122,100	168,100	123,500
Net operating income (loss)	$ 59,300	$ 30,900	$ 43,900	$ (15,500)

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.

	Totals	Dirt Bikes	Mountain Bikes	Racing Bikes
Sales	?	?	?	?
Variable manufacturing and selling expenses	?	?	?	?
Contribution margin (loss)	0	0	0	0
Traceable fixed expenses:	?	?	?	?
Depreciation of special equipment	?	?	?	?
Salaries of the product line managers	?	?	?	?
Advertising, traceable	?	?	?	?
Total traceable fixed expenses	0	0	0	0
Product line segment margin (loss)	0	$0	$0	$0
Common fixed expenses	?
Net operating income (loss)	$0