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 $ $934,000$ $ $269,000$ $ $409,000$ $ $256,000$

Variable manufacturing and selling expenses $466,000115,000199,000152,000$

Contribution margin $468,000154,000210,000104,000$

Fixed expenses:

Advertising, traceable $70,1008,60040,90020,600$

Depreciation of special equipment $43,60020,3007,70015,600$

Salaries of product$-$line managers $114,90040,30038,30036,300$

Allocated common fixed expenses$*186,80053,80081,80051,200$

Total fixed expenses $415,400123,000168,700123,700$

Net operating income $($loss$)$ $ $52,600$ $ $31,000$ $ $41,300$ $ $(19,700)$

$*$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.