The Regal Cycle Company manufactures three types of bicycles$$a 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 $ $919,000$ $ $263,000$ $ $404,000$ $ $252,000$

Variable manufacturing and selling expenses $481,000115,000209,000157,000$

Contribution margin $438,000148,000195,00095,000$

Fixed expenses:

Advertising, traceable $70,5008,60040,90021,000$

Depreciation of special equipment $43,50020,9007,20015,400$

Salaries of product$-$line managers $113,90040,20038,40035,300$

Allocated common fixed expenses$*183,80052,60080,80050,400$

Total fixed expenses $411,700122,300167,300122,100$

Net operating income $($loss$)$ $ $26,300$ $ $25,700$ $ $27,700$ $ $(27,100)$

$*$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.