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 $ $920,000$ $ $264,000$ $ $403,000$ $ $253,000$

Variable manufacturing and selling expenses $468,000118,000199,000151,000$

Contribution margin $452,000146,000204,000102,000$

Fixed expenses:

Advertising, traceable $69,9008,80041,00020,100$

Depreciation of special equipment $42,80020,1007,20015,500$

Salaries of product$-$line managers $116,10040,50038,90036,700$

Allocated common fixed expenses$*184,00052,80080,60050,600$

Total fixed expenses $412,800122,200167,700122,900$

Net operating income $($loss$)$ $ $39,200$ $ $23,800$ $ $36,300$ $ $(20,900)$

$*$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