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 $ $920,000$ $ $261,000$ $ $409,000$ $ $250,000$

Variable manufacturing and selling expenses $476,000111,000209,000156,000$

Contribution margin $444,000150,000200,00094,000$

Fixed expenses:

Advertising, traceable $68,9008,20040,40020,300$

Depreciation of special equipment $44,00020,8007,30015,900$

Salaries of product$-$line managers $115,40040,80038,70035,900$

Allocated common fixed expenses$*184,00052,20081,80050,000$

Total fixed expenses $412,300122,000168,200122,100$

Net operating income $($loss$)$ $ $31,700$ $ $28,000$ $ $31,800$ $ $(28,100)$

$*$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.