Exercise 11-2 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 sanagers Allocated common fixed expenses Total fixed expenses Net operating income (los) Dirt Mountain Racing Total Bikes Bikes Bikes $ 921,000 $264,000 $ 401,000 $256, eee 427,000 118, see 203,000 156, eee 444,000 146,000 198,00 100,000 70, 4ee home 40,700 20, Bee 43, 100 20,400 7, see 15,200 114,800 40,200 38,5ee 36,100 184,200 52, see Be, zee 51,200 412,5ee 122,388 166,960 123,308 $ 31, 508 5 23,700 32,100 $(23,3ee) 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 property 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. . B o O - to search 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 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. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin loss Traceable foxed expenses Tola traceable foxed expenses Product line segment marginos Net operating income (oss