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 $ $933,000$ $ $267,000$ $ $409,000$ $ $257,000$

Variable manufacturing and selling expenses $472,000114,000198,000160,000$

Contribution margin $461,000153,000211,00097,000$

Fixed expenses:

Advertising, traceable $69,2008,70040,40020,100$

Depreciation of special equipment $43,70020,7007,40015,600$

Salaries of product$-$line managers $115,10040,90038,40035,800$

Allocated common fixed expenses$*186,60053,40081,80051,400$

Total fixed expenses $414,600123,700168,000122,900$

Net operating income $($loss$)$ $ $46,400$ $ $29,300$ $ $43,000$ $ $(25,900)$

$*$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.