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 $ 915,000 $ 263,000 $ 400,000 $ 252,000 Variable manufacturing and selling expenses 470,000 113,000 198,000 159,000 Contribution margin 445,000 150,000 202,000 93,000 Fixed expenses: Advertising, traceable 69,700 8,600 40,400 20,700 Depreciation of special equipment 44,000 20,700 7,900 15,400 Salaries of product-line managers 115,800 40,500 38,500 36,800 Allocated common fixed expenses* 183,000 52,600 80,000 50,400 Total fixed expenses 412,500 122,400 166,800 123,300 Net operating income (loss) $ 32,500 $ 27,600 $ 35,200 $ (30,300) *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 (loss)	$0