2 Exercise 12-2 Dropping or Retaining a Segment [L012-2] 14.28 ycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and points expenses for the past quarter follow Dirt Bikes Mountain Racing eBook Hint Print References Total Bikes Bikes Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: $921,000 $263,000 401,000 257,000 474,000 114,000 207,000 153,000 447,000 149,000 194,000194,000 Advertising, traceable 9,500 8,800 4,200 20,500 7,500 15,300 114,100 40,000 38,200 35,900 184,200 52,600 80,200 51,400 166,100 123,100 Net operating income (loss) 35,900 5 27,100 27,900 (19,100) Depreciation of special Salaries of product-line Allocated common fixed 43,300 20,500 equipment managers expenses* Total fixed expenses 411,100 121,900 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? Mc Graw