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:

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Total Dirt Bikes Mountain Bikes Racing Bikes

Sales $ $922,000$ $ $267,000$ $ $402,000$ $ $253,000$

Variable manufacturing and selling expenses $461,000114,000190,000157,000$

Contribution margin $461,000153,000212,00096,000$

Fixed expenses:

Advertising, traceable $69,0008,30040,20020,500$

Depreciation of special equipment $43,40020,4007,90015,100$

Salaries of product$-$line managers $115,20040,20038,60036,400$

Allocated common fixed expenses$*184,40053,40080,40050,600$

Total fixed expenses $412,000122,300167,100122,600$

Net operating income $($loss$)$ $ $49,000$ $ $30,700$ $ $44,900$ $ $(26,600)$

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$*$Allocated on the basis of sales dollars.

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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.

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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.