Check my work 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: Dirt Mountain Racing Total Bikes Bikes Bikes $ 924,000 $266,000 $ 404,000 $ 254,000 478,000 120,000 204,000 154,000 446,000 146,000 200,000 100,000 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) 69,500 8,900 40,500 20,100 44,100 20,700 7,600 15,800 115,800 40,200 38,800 36,800 184,800 53,200 80,800 50.800 414,200 123,000 167, 700 123,500 $ 31,800 $ 23,000 $ 32,300 $(23,500) *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