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 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 Het operating Incone (loss) Dirt Mountain Racing Total Bikes Bikes Bikes $928,000 $267.000 $ 407,000 5 254,000 455,000 114.000 190,00 151,000 473.000 153,000 212,000 103,000 69,900 9,000 40,500 ze, 400 43,300 20,200 7,200 15,900 114,900 40,100 38.000 36,500 185,600 53,400 81,400 50,80 413.700 122,700 167,100 123.900 $ 59,300 $ 30,300 $ 49,9005(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 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 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Read