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	$ 926,000	$ 265,000	$ 402,000	$ 259,000

Variable manufacturing and selling expenses	459,000	112,000	195,000	152,000
Contribution margin	467,000	153,000	207,000	107,000
Fixed expenses:
Advertising, traceable	68,900	8,300	40,300	20,300
Depreciation of special equipment	43,600	20,700	7,700	15,200
Salaries of product-line managers	114,300	40,200	38,700	35,400
Allocated common fixed expenses*	185,200	53,000	80,400	51,800
Total fixed expenses	412,000	122,200	167,100	122,700
Net operating income (loss)	$ 55,000	$ 30,800	$ 39,900	$ (15,700)

*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.

What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes