Exercise 11-2 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: Dirt Mountain Racing Bikes Bikes Total S 923,000 Bikes $ 252,eee $269,eee 4e2,eee Sales Variable manufacturing and selling expenses 477,eee 114,e8e 289,888 154, 688 Contribution nargin Fixed expenses 446,ee8 155,888 193,98898,8ee nt Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses 69,788 8,88e 48,78e 2,28e 42,90e 2e, 588 ences 7,2015,28 36,5ee 38,108 88,400 166,48e 115,288 48,689 53,8 412,48 123,799 184,68 Total fixed expenses 5 33,689 5 31,300 5 26,686 5(24,399) Net operating incone (loss) Allocated on the basis of sales dollars Prey 2 of 4 Next> 95 Check my work 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. ook int rint Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? Check my work Required Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? Required 2 > Return to question Complete this question by entering your answers in the tabs below Should the production and sale of racing bikes be discontinued? Required 3 Required Check my worh 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. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Product line segment margin (loss) Net operating income (loss) K Prex 2 of 4l Next >