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 $ $922,000$ $ $267,000$ $ $400,000$ $ $255,000$

Variable manufacturing and selling expenses $473,000119,000196,000158,000$

Contribution margin $449,000148,000204,00097,000$

Fixed expenses:

Advertising, traceable $69,6009,00040,40020,200$

Depreciation of special equipment $43,20020,9007,10015,200$

Salaries of product$-$line managers $114,00040,10038,40035,500$

Allocated common fixed expenses$*184,40053,40080,00051,000$

Total fixed expenses $411,200123,400165,900121,900$

Net operating income $($loss$)$ $ $37,800$ $ $24,600$ $ $38,100$ $ $(24,900)$

$*$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.