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 $ $921,000$ $ $264,000$ $ $402,000$ $ $255,000$

Variable manufacturing and selling expenses $475,000110,000209,000156,000$

Contribution margin $446,000154,000193,00099,000$

Fixed expenses:

Advertising, traceable $69,6008,60040,20020,800$

Depreciation of special equipment $44,00020,9007,40015,700$

Salaries of product$-$line managers $116,30040,70038,80036,800$

Allocated common fixed expenses$*184,20052,80080,40051,000$

Total fixed expenses $414,100123,000166,800124,300$

Net operating income $($loss$)$ $ $31,900$ $ $31,000$ $ $26,200$ $ $(25,300)$

$*$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.