Exercise 13-2 (Algo) Dropping or Retaining a Segment (L013-2] 10 points The Regal Cycle Company manufactures three types of bicycles-a dort bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow. ok ht Dirt Total 5928,000 $20,000 $493,000 $250,000 461.00 114, 156, 195,000 102, References Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses Advertising, traceable Depreciation of special equipment Salaries of product line managers Allocated common fixed expenses Total Fixed expenses Met operating income (less) 69,00 8,70 See 28,200 4),600 20.00 7.00 15.00 115,700 60,900 38,500 36,300 185,600 53. 51,200 414.30 12), Boe 1670 12.10 $ 52,700 $ 31,200 $ 12,000 $(21,100) "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 varie 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 3 10 points Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as I the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does 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 assessi profitability of the various product lines. eBook Hint References 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? RCLER Required 2 > Me Graw GHI Me 3 3 10 points Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear ou 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 profitability of the various product lines. eBook Complete this question by entering your answers in the tabs below. References 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 Bike Racing Bikes Contribution margin (loss) Traceable foed expenses Total traceable fixed expenses Product line segment margin (5) Mc Gr Hill Type here to search