Exercise 11-2 (Algo) Dropping or Retaining a Segment [LO11-2] 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 Sales Variable factoring and selling expenses Contribution margin Fixed expemes Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated confidexpenses Total fland expenses Set sperating Income (lass) Allocated on the besin of sales dollars Total $934,000 480,000 454,000 Dirt Bikes $266,000 Mountain Bikes $400,000 Racing Bikes 5 260,000 115,000 151,000 200,000 199,000 156,000 104,000 20,100 8,800 40,400 20,900 43,600 20,500 1,000 15,500 115,000 40,000 38,900 15,500 106,000 53,200 81,500 52,000 415 500 13),100 168,500 123 $38,500 $ 27,900 $30,500 (19,900) 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 What is the financial advantage (sadvantage per quarter of discontinuing the Racing Bes? 2. Should the production and sale of racing bikes be discontinued 1. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profabety of the various product lines Complete this question by entering your answers in the tabs below. Help Check