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 $ $926,000$ $ $269,000$ $ $404,000$ $ $253,000$

Variable manufacturing and selling expenses $470,000119,000192,000159,000$

Contribution margin $456,000150,000212,00094,000$

Fixed expenses:

Advertising, traceable $69,1008,30040,60020,200$

Depreciation of special equipment $44,10020,6007,80015,700$

Salaries of product$-$line managers $115,40040,40038,40036,600$

Allocated common fixed expenses$*185,20053,80080,80050,600$

Total fixed expenses $413,800123,100167,600123,100$

Net operating income $($loss$)$ $ $42,200$ $ $26,900$ $ $44,400$ $ $(29,100)$

$*$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.