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 $ 261,000 $ 403,000 $ 257,000 Variable manufacturing and selling expenses 467,000 119,000 196,000 152,000 Contribution margin 454,000 142,000 207,000 105,000 Fixed expenses: Advertising, traceable 69,300 8,700 40,300 20,300 Depreciation of special equipment 43,100 20,300 7,500 15,300 Salaries of product-line managers 114,700 40,300 38,400 36,000 Allocated common fixed expenses* 184,200 52,200 80,600 51,400 Total fixed expenses 411,300 121,500 166,800 123,000 Net operating income (loss) $ 42,700 $ 20,500 $ 40,200 $ (18,000)

*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.* 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.