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 $ $919,000$ $ $267,000$ $ $402,000$ $ $250,000$

Variable manufacturing and selling expenses $473,000119,000195,000159,000$

Contribution margin $446,000148,000207,00091,000$

Fixed expenses:

Advertising, traceable $69,9008,30040,80020,800$

Depreciation of special equipment $44,10020,5007,80015,800$

Salaries of product$-$line managers $115,00040,20038,20036,600$

Allocated common fixed expenses$*183,80053,40080,40050,000$

Total fixed expenses $412,800122,400167,200123,200$

Net operating income $($loss$)$ $ $33,200$ $ $25,600$ $ $39,800$ $ $(32,200)$

$*$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?

$2.$ 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.