Total			Dirt Bikes			Mountain Bikes			Racing Bikes
Sales	$	923,000		$	267,000		$	401,000		$	255,000
Variable manufacturing and selling expenses		470,000			117,000			203,000			150,000
Contribution margin		453,000			150,000			198,000			105,000
Fixed expenses:
Advertising, traceable		69,800			8,600			40,500			20,700
Depreciation of special equipment		43,400			20,200			7,500			15,700
Salaries of product-line managers		114,800			40,000			38,700			36,100
Allocated common fixed expenses*		184,600			53,400			80,200			51,000
Total fixed expenses		412,600			122,200			166,900			123,500
Net operating income (loss)	$	40,400		$	27,800		$	31,100		$	(18,500)

*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.