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 $ $931,000$ $ $269,000$ $ $405,000$ $ $257,000$

Variable manufacturing and selling expenses $468,000113,000200,000155,000$

Contribution margin $463,000156,000205,000102,000$

Fixed expenses:

Advertising, traceable $70,0008,90040,90020,200$

Depreciation of special equipment $43,70020,4007,60015,700$

Salaries of product$-$line managers $113,80040,30038,20035,300$

Allocated common fixed expenses$*186,20053,80081,00051,400$

Total fixed expenses $413,700123,400167,700122,600$

Net operating income $($loss$)$ $ $49,300$ $ $32,600$ $ $37,300$ $ $(20,600)$

$*$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.