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 $ $926,000$ $ $263,000$ $ $404,000$ $ $259,000$

Variable manufacturing and selling expenses $467,000120,000194,000153,000$

Contribution margin $459,000143,000210,000106,000$

Fixed expenses:

Advertising, traceable $69,7008,60040,80020,300$

Depreciation of special equipment $43,50020,8007,60015,100$

Salaries of product$-$line managers $115,90040,90038,70036,300$

Allocated common fixed expenses$*185,20052,60080,80051,800$

Total fixed expenses $414,300122,900167,900123,500$

Net operating income $($loss$)$ $ $44,700$ $ $20,100$ $ $42,100$ $ $(17,500)$

$*$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.