Exercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-21 10 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: Total $ 924,820 474,00 450,000 Dirt Bikes $ 263.000 118,eee 145, eee Mountain Bikes $ 489,880 284,00 205,000 Racing Bikes $ 252,00 152,880 100.680 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 Net operating inconte (loss) 69,900 43,560 115,180 184, see 413, 380 $36,700 8, 2ee 28,9ee 40, see 52,600 122, 2ee $ 22,800 40,989 7,482 38,280 81,800 168,300 $ 36,780 2e, see 15, 280 36.480 50,400 122,8ee $ (22,see) 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. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?