EXERCISE 13-2 Dropping or Retaining a Segment (LO2] 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 Bikes Bikes Sales. $300,000 $90,000 $150,000 $60,000 Variable manufacturing and selling expenses. 120,000 27,000 60,000 33,000 Contribution margin...... diss. 180,000 63,000 90,000 27,000 Fixed expenses: Advertising, traceable..... 30,000 10,000 14,000 6,000 Depreciation of special equipment.... 23,000 6,000 9,000 8,000 Salaries of product-line managers... 35,000 12,000 13,000 10,000 Allocated common fixed expenses.... 60,000 18,000 30,000 12,000 Total fixed expenses.. 148,000 46,000 66,000 36,000 Net operating income (loss)..... $ 32,000 $17,000 $ 24,000 $ (9,000) Allocated on the basis of sales dollars.