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: Dirt Mountain Racing Total Bikes Bikes Bikes $928,000 $267,000 $409,000 $ 252,000 469,000 120,000 194,000 155,000 459,000 147,000 215,000 37,000 Sales Variable manufacturing and selling expenses Contribution margin Pixed expenses! Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Tatal fixed expenses Net operating income (loss) 70,600 8,800 40.900 20,900 44,000 21,000 7,500 15,400 115,000 40,100 38,300 36,600 185,600 53,400 81,800 50,400 415,200 123,300 168,600 123,300 $ 43,800 $ 23,700 $ 46,400 $(26,300) *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. 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 (disadvantage) per quarter