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	$	933,000		$	264,000		$	410,000		$	259,000
Variable manufacturing and selling expenses		463,000			114,000			196,000			153,000
Contribution margin		470,000			150,000			214,000			106,000
Fixed expenses:
Advertising, traceable		70,300			8,900			40,600			20,800
Depreciation of special equipment		43,000			20,500			7,300			15,200
Salaries of product-line managers		113,500			40,300			38,100			35,100
Allocated common fixed expenses*		186,600			52,800			82,000			51,800
Total fixed expenses		413,400			122,500			168,000			122,900
Net operating income (loss)	$	56,600		$	27,500		$	46,000		$	(16,900)

*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.

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Complete this question by entering your answers in the tabs below. Required 1 Required a Required 2 Required 2 Required 3 Required 3 Should the production and sale of racing bikes be discontinued? Yes ONO 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) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss)