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 $ $928,000$ $ $269,000$ $ $409,000$ $ $250,000$

Variable manufacturing and selling expenses $474,000116,000198,000160,000$

Contribution margin $454,000153,000211,00090,000$

Fixed expenses:

Advertising, traceable $70,3008,60040,80020,900$

Depreciation of special equipment $44,30021,0007,50015,800$

Salaries of product$-$line managers $114,90040,30038,70035,900$

Allocated common fixed expenses$*185,60053,80081,80050,000$

Total fixed expenses $415,100123,700168,800122,600$

Net operating income $($loss$)$ $ $38,900$ $ $29,300$ $ $42,200$ $ $(32,600)$

$*$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.