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 $ $928,000$ $ $267,000$ $ $410,000$ $ $251,000$

Variable manufacturing and selling expenses $465,000116,000197,000152,000$

Contribution margin $463,000151,000213,00099,000$

Fixed expenses:

Advertising, traceable $69,7008,70040,60020,400$

Depreciation of special equipment $43,90020,7007,60015,600$

Salaries of product$-$line managers $115,30040,80038,40036,100$

Allocated common fixed expenses$*185,60053,40082,00050,200$

Total fixed expenses $414,500123,600168,600122,300$

Net operating income $($loss$)$ $ $48,500$ $ $27,400$ $ $44,400$ $ $(23,300)$

$*$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.