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	$ 932,000	$ 269,000	$ 408,000	$ 255,000
Variable manufacturing and selling expenses	483,000	117,000	209,000	157,000
Contribution margin	449,000	152,000	199,000	98,000
Fixed expenses:
Advertising, traceable	69,700	8,400	40,700	20,600
Depreciation of special equipment	43,600	20,700	7,200	15,700
Salaries of product-line managers	114,300	40,400	38,800	35,100
Allocated common fixed expenses*Footnote asterisk	186,400	53,800	81,600	51,000
Total fixed expenses	414,000	123,300	168,300	122,400
Net operating income (loss)	$ 35,000	$ 28,700	$ 30,700	$ (24,400)

*Footnote asteriskAllocated 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. 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.

Question 1- What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

Question 2 - 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)	$0