2 nts eBook Hint Exercise 11-2 (Algo) Dropping or Retaining a Segment [LO11-2] 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 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 ferences Net operating income (loss) *Allocated on the basis of sales dollars. Total $ 923,000 472,000 451,000 Dirt Bikes $ 269,000 112,000 157,000 Mountain Bikes $ 401,000 202,000 Racing Bikes $ 253,000 158,000 199,000 95,000 69,000 8,200 40,500 20,300 43,700 20,700 7,400 15,600 114,900 40,400 38,200 36,300 184,600 53,800 80,200 50,600 412,200 123,100 166,300 122,800 $ 38,800 $ 33,900 $ 32,700 $ (27,800) 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?