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: ad Dirt Mountain Racing Total Bikes Bikes Bikes Sales $918,000 $264,000 $404,000 $ 250,000 Variable manufacturing and selling expenses 456,000 111,000 191,000 154,000 Contribution margin 462,000 153,000 213,000 96,000 Fixed expenses : Advertising, traceable 70,400 8,800 40,800 20,800 Depreciation of special equipment 43,900 20,500 7,500 15,900 Salaries of product- line managers 114,400 40,100 38,900 35,400 Allocated common fixed expenses 183,600 52,800 80,800 50,000 Total fixed expenses 412,300 122,200 168,000 122, 100 Net operating income $ 49,700 $ 30,800 $ 45,000 $(26,100) (loss) onces "Allocated on the basis of sales dollars. Manager 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. Complete this question by entering your answers in the tabs below. Required Required 2 What is the financial advantage advantage) per quarter of continuing the Racing Bas