Exercise 13-2 (Algo) Dropping or Retaining a Segment (LO13-2] 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: Total 5 929.000 466,000 463.000 Mountain Dirt Bikes Bikes $ 269,000 $ 405,000 112,000 192.000 157.000 200.000 Racing Bikes $ 255,000 157.000 90,000 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 find expenses Het operating incon (los) 69.100 43,300 116,500 185,800 414,700 $ 48,300 8,200 20,400 40.600 53.800 123.000 $ 34,000 40,100 7.500 39,000 81.000 167.600 $ 40,400 20.800 15,400 36,900 51.000 124,100 5 (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 thiustion by entering your answers in the tabs below