Help Exercise 12-2 Dropping or Retaining a Segment [LO12-2 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: ein Total Bikes Bikes Sales Variable manufacturing and selling s 922,000 $266,000 s 402,000 254,000 473,000118 000 199,000 156,000 98,000 expenses Contribution margin Fixed expenses: . 449,000 148 000203.000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses 70,4008, 500 40.90021,000 7.90015,900 35,400 50,800 414,300 123,100 168.100 123,100 $ 34, 700 24.900 S 34,900 (25,100) 44.700 20,900 114, 800 40,500 38.900 184,400 53,200 80.400 Total fixed expenses Net operating income (loss) 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 no 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? Next> K Prey1 of 6 10 ogy WSU Webmail Yahoo G Gc ork 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 o the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear ou 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- 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? Required 2> Complete this question by entering your answers in the tabs below. Required 2 Required 3 Required 1 Prepare a properly formatted segmented income statement that would be more useful to management in assessing t run profitability of the various product lines Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Tra Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) Required 2 Next > Prev1 of 6