3 Exercise 11-2 Dropping or Retaining a Segment [L011-2) poany manufactures three ypes of bleycles-a bke mcuntain biend rading bike Data on sls nd eBook The expenses for the past quarter follow: Dirt Mountain Racing Bikes Total Bikes Sales Variable manufacturing and selling $38e,eee $98,eee 15e,eee $60,eee expenses Contribution margin Fixed expenses: 128,888 27,e80 188,8e8 90,888 27,80 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses 38,eee 1e,eee 23,e00 6,800 35,eee 12,eee 6e,eee 18,3e 148,600 46,ee0 14,08 6,ee0 9,000 8,ee9 13,000 1e,000 30,8ee 12,e 66, ee0 36,eee 32,800 $17,000 $ 24,eee $ (9,eee) Total fixed expenses Net operating income (loss) Allocated on the basis of sales dollars. ent is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not does not wear out the line should be discontinued. The special equipment used to produce racing bikes has no resale value and 1. What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? 2. Should the production and sale of racina bikes be discontinued? Prev 3 of 13 Next Type here to search 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 profitablity of the various product lines. Complete this question by entering your answers in the tabs below What is the financial advantage (disadvantage) per quarter of discontinulng the racing bikes? K Prev3 of 13 Next ere to search