Exercise 6-2 (Algo) Dropping or Retaining a Segment [LO6-2] The Regal Cycle Company manufactures three types of bicycies-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: 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 weac out Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Blkes? 2. Should the production and sale of tacing bikes be discontinued? 3. Prepare a properly formatted segmented income statement that wouid be more useful to management in assessing the long-run profitability of the various product lines