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 $ $927,000$ $ $270,000$ $ $403,000$ $ $254,000$

Variable manufacturing and selling expenses $469,000112,000202,000155,000$

Contribution margin $458,000158,000201,00099,000$

Fixed expenses:

Advertising, traceable $69,7008,50040,30020,900$

Depreciation of special equipment $43,60020,8007,60015,200$

Salaries of product$-$line managers $115,20040,40038,90035,900$

Allocated common fixed expenses$*185,40054,00080,60050,800$

Total fixed expenses $413,900123,700167,400122,800$

Net operating income $($loss$)$ $ $44,100$ $ $34,300$ $ $33,600$ $ $(23,800)$

$*$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.