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 $ $920,000$ $ $267,000$ $ $402,000$ $ $251,000$

Variable manufacturing and selling expenses $468,000117,000195,000156,000$

Contribution margin $452,000150,000207,00095,000$

Fixed expenses:

Advertising, traceable $69,5008,90040,20020,400$

Depreciation of special equipment $42,90020,1007,70015,100$

Salaries of product$-$line managers $115,00040,40038,40036,200$

Allocated common fixed expenses$*184,00053,40080,40050,200$

Total fixed expenses $411,400122,800166,700121,900$

Net operating income $($loss$)$ $ $40,600$ $ $27,200$ $ $40,300$ $ $(26,900)$

$*$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.