18 Exercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-2] 0.2 points 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: Sales eBook Hint Print Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) "Allocated on the basis of sales dollars. Total $ 922,000 469,000 453,000 Dirt Bikes $ 263,000 113,000 150,000 Mountain Bikes $ 405,000 199,000 206,000 Racing Bikes $ 254,000 157,000 97,000 69,500 8,400 40,900 20,200 43,200 20,300 7,700 15,200 116,300 40,500 38,900 36,900 184,400 52,600 81,000 50,800 413,400 121,800 168,500 123,100 $ 39,600 $ 28,200 $ 37,500 $ (26,100) References 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Financial advantage (disadvantage) per quarter Required 1 Required 2 >