Chapter 13 - Homework 3 - Algorithmic 6 Saved Help Save & Exit Submit Check my work 1 Exercise 13-2 (Algo) Dropping or Retaining a Segment[LO13-2] 75 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: points Bikes Dirt Mountain Racing Total Bikes Bikes $ 927,000 $267,000 $ 406,000 $ 254,000 460,000 118,000 192,000 150,000 467,000 149,000 214,000 104,000 eBook 000 Hint Sales Variable manufacturing and selling expenses Contribution margin Pixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) 69,500 8,700 40,400 20,400 44,200 20,700 7,500 16,000 116,000 40,800 38,800 36,400 185,400 81,200 50,800 415, 100 123,600 167,900 123,600 $ 51,900 $ 25,400 $ 46,100 $(19,600) 53,400 Print References *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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3