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 $ $924,000$ $ $266,000$ $ $407,000$ $ $251,000$

Variable manufacturing and selling expenses $481,000119,000203,000159,000$

Contribution margin $443,000147,000204,00092,000$

Fixed expenses:

Advertising, traceable $70,7008,90040,90020,900$

Depreciation of special equipment $44,00020,3008,00015,700$

Salaries of product$-$line managers $113,10040,00038,10035,000$

Allocated common fixed expenses$*184,80053,20081,40050,200$

Total fixed expenses $412,600122,400168,400121,800$

Net operating income $($loss$)$ $ $30,400$ $ $24,600$ $ $35,600$ $ $(29,800)$

$*$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.