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 $ $928,000$ $ $266,000$ $ $409,000$ $ $253,000$

Variable manufacturing and selling expenses $468,000119,000190,000159,000$

Contribution margin $460,000147,000219,00094,000$

Fixed expenses:

Advertising, traceable $69,8008,20040,80020,800$

Depreciation of special equipment $44,30021,0007,70015,600$

Salaries of product$-$line managers $114,20040,00038,20036,000$

Allocated common fixed expenses$*185,60053,20081,80050,600$

Total fixed expenses $413,900122,400168,500123,000$

Net operating income $($loss$)$ $ $46,100$ $ $24,600$ $ $50,500$ $ $(29,000)$

$*$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.