Exercise 12-2 Dropping or Retaining a Segment [L012-2] 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 TotalBikes Bikes Bikes S921,000$406,000 $253.000 115,000 200,000 151,000 Sales Variable manufacturing and 000 selling expenses 147,000 206,000 102,000 Contribution margin 455,000 Fixed expenses: Depreciation of special Salaries of product-ine Allocated common fixed 69,700 8,200 40,700 20,800 44,000 21,000 7,400 15,600 115,800 40,700 38,300 36,800 184,200 52,400 81,200 50,600 122,300 Total fixed expenses 413,700 167,600 123,800 Net operating income loss) 41,300 S24,700 38,400 $ (21,800) 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