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 Total Bikes Bikes Bikes Sales $ 928,000 $264,000 $ 404,00 $ 260, eee Variable manufacturing and selling expenses 475,eee 120,000 197, eee 158,000 Contribution margin 453, eee 144, eee 207,eee 102,00 Fixed expenses Advertising, traceable 7e, 1ee 8,9ee 4e, see 20,400 Depreciation of special equipment 43,400 20,900 7,400 15,100 Salaries of product line managers 114, Bee 40,8ee 38,689 35,400 Allocated common fixed expenses 185,6ee 52,8ee 80, 800 52, eee Total fixed expenses 413,90123,480 167, 680 122,9ee Net operating income (loss) $ 39,100 $ 20,6ee $ 39,400 $(20,900) "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. 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 property 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: Required 2 Required) What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? Required: 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 property 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! Required 2 Required) Should the production and sale of racing bikes be discontinued? Oves No Required 1 Required 2 Required 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. 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 (los)