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	$ 262,000	$ 401,000	$ 258,000
Variable manufacturing and selling expenses	477,000	119,000	206,000	152,000
Contribution margin	444,000	143,000	195,000	106,000
Fixed expenses:
Advertising, traceable	70,600	8,900	40,700	21,000
Depreciation of special equipment	43,300	20,300	7,800	15,200
Salaries of product-line managers	115,900	40,200	38,900	36,800
Allocated common fixed expenses*	184,200	52,400	80,200	51,600
Total fixed expenses	414,000	121,800	167,600	124,600
Net operating income (loss)	$ 30,000	$ 21,200	$ 27,400	$ (18,600)

*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.

	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	$ 0	---	------	------