10 poin 2 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 eflook e H P Sales 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 fixed expenses Net operating income (loss) "Allocated on the basis of sales dollars. Mountain $ 931,000 Total 474,000 457,000 Dirt Bikes Bikes $270,000 $ 404,000 Racing Bikes $257,000 135,000 207,000 155,000 197,000 152,000 105,000 70,400 8,600 40,900 20,900 43,400 20,200 7,000 15,400 115,200 40,800 38,100 36,300 186,200 54,000 00,800 51,400 415,200 $41,800 123,600 167,600 $31,400. 124,000 $29,400 $ (19,000) Management is considering discontinuing the racing bikes. 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? Required 11 Required 2 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required 1 Required 2 Should the production and sale of racing bikes be discontinued? < Required 1 Required 2