Exercise 13-2 (Algo) Dropping or Retaining a Segment (LO13-2) 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 sikea Bikes 5930,000 $262.000 S409, 000 $ 259,000 474,000 114,000 204,000 156,000 456,000 140,000 205,000 103,000 Balas Variable manufacturing and selling expenses Contribution margin Fixed expenses Advertising. tracen la Depreciation of special equipment olaries of product-line managers Allocated common tixed expense total fised expenses et operating income loan 70.400 1.900 40,600 20, 500 43,000 20.900 7.300 25, 600 114.900 40.200 30.400 36,300 106,000 52,400 1.800 51 000 415,100 222,400 160200 1222600 540,90025, 600 S 36,900.421.600) "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 Complete this question by entering your answers in the tabs below. enured Red Renned PCCJ. 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? Required Required 2 > Financial (disadvantage) per quarter Financial advantage per quarter Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a properly formatted segmented income statement that would be more useful to management in assessing run profitability of the various product lines. Totals Dirt Bikes Mountain Bikes Racing Bikes 0 Contribution margin (loss) Traceable foxed expenses 0 0 0 0 D Total traceable fixed expenses Product line segment margin (loss) 0 0 0 $ 0 $ O Net operating income (loss) 0 Pered