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 $ $926,000$ $ $268,000$ $ $401,000$ $ $257,000$

Variable manufacturing and selling expenses $478,000117,000210,000151,000$

Contribution margin $448,000151,000191,000106,000$

Fixed expenses:

Advertising, traceable $70,1008,80040,50020,800$

Depreciation of special equipment $43,80020,7007,60015,500$

Salaries of product$-$line managers $115,10040,40038,20036,500$

Allocated common fixed expenses$*185,20053,60080,20051,400$

Total fixed expenses $414,200123,500166,500124,200$

Net operating income $($loss$)$ $ $33,800$ $ $27,500$ $ $24,500$ $ $(18,200)$

$*$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.