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 $ $929,000$ $ $270,000$ $ $405,000$ $ $254,000$

Variable manufacturing and selling expenses $470,000115,000205,000150,000$

Contribution margin $459,000155,000200,000104,000$

Fixed expenses:

Advertising, traceable $70,3009,00040,70020,600$

Depreciation of special equipment $44,40020,6007,90015,900$

Salaries of product$-$line managers $114,80040,90038,10035,800$

Allocated common fixed expenses$*185,80054,00081,00050,800$

Total fixed expenses $415,300124,500167,700123,100$

Net operating income $($loss$)$ $ $43,700$ $ $30,500$ $ $32,300$ $ $(19,100)$

$*$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.