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 $ $926,000$ $ $263,000$ $ $409,000$ $ $254,000$

Variable manufacturing and selling expenses $469,000117,000197,000155,000$

Contribution margin $457,000146,000212,00099,000$

Fixed expenses:

Advertising, traceable $69,7008,30040,90020,500$

Depreciation of special equipment $44,00020,9007,50015,600$

Salaries of product$-$line managers $115,90040,90038,30036,700$

Allocated common fixed expenses$*185,20052,60081,80050,800$

Total fixed expenses $414,800122,700168,500123,600$

Net operating income $($loss$)$ $ $42,200$ $ $23,300$ $ $43,500$ $ $(24,600)$

$*$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.