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 5 917,000 $261,300 $ 406,000 $250,00 474,000 119,00 284, 151 000 443, 142 000 202,00 99.000 Sales Variable manufacturing and selling expenses Contribution margin Fixed pense! Advertising traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Tatal fixed expenses efperating Income (less) 60,20 40,00 20.20 4560 20,00 7,800 15,500 113,900 40,200 38. See 35,200 183, 5220 B1,200 So, 000 410 100 120, 16.se $32,900 $ 21.100 33,00 3121,000) Allocated on the basis of sales dollars, Management is concerned about the continued losses shown by the racing olkes and wants a recommendation as to whether or to! thene should be discontinued. The special equipment used to produce racing bikes nas no resale value and does not wout Required: 1 What is the financial advantage disadvantage per quarter of discontinuing the racing bikes 2 Shou d the production and sale of recing blkes be discontinued? 3. Prepare a property formatted cegmented income statement that would be more useful to management in assessing tise ong-rus profitability of the various product lines