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 $ $916,000$ $ $262,000$ $ $402,000$ $ $252,000$

Variable manufacturing and selling expenses $471,000112,000204,000155,000$

Contribution margin $445,000150,000198,00097,000$

Fixed expenses:

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

Depreciation of special equipment $43,20020,3007,30015,600$

Salaries of product$-$line managers $113,60040,10038,20035,300$

Allocated common fixed expenses$*183,20052,40080,40050,400$

Total fixed expenses $410,300121,800166,600121,900$

Net operating income $($loss$)$ $ $34,700$ $ $28,200$ $ $31,400$ $ $(24,900)$

$*$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.