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		$	266,000		$	405,000		$	255,000
Variable manufacturing and selling expenses		476,000			118,000			205,000			153,000
Contribution margin		450,000			148,000			200,000			102,000
Fixed expenses:
Advertising, traceable		70,300			9,000			40,700			20,600
Depreciation of special equipment		42,900			20,200			7,500			15,200
Salaries of product-line managers		114,300			40,900			38,000			35,400
Allocated common fixed expenses*		185,200			53,200			81,000			51,000
Total fixed expenses		412,700			123,300			167,200			122,200
Net operating income (loss)	$	37,300		$	24,700		$	32,800		$	(20,200)

*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.

Prepare a properly formatted segmented income statement that would be more useful to management in assessing the longrun profitability of the various product lines