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Exercise 11-2 Dropping or Retaining a Segment [LO11-2) The Regn 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 5927,000 $265,000 $408,00 $ 254,800 Variable manufacturing and selling 482,600 118,000 expenses 206,000 158,000 Contribution margin 445,000 147.800 202,000 96,000 Fixed expenses Advertising, traceable 69.500 8,700 40,600 20,200 Depreciation of special equipment 43,900 20,920 7,780 15,380 Salaries of product-line nanagers 114,500 40,200 38,90 35,400 Allocated conton fixed expenses 185,400 53,200 81,600 50,00 Total fixed expenses 423,300 122,800 168.800 121.71 Net operating income loss) 5.31,700 5 24,200 $ 33,200 $(25.700) *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 incontestatement 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 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 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 Should the production and sale of racing bikes be discontinued? Oyes ONO 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 the long- run profitability of the various product lines. Tetails Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (los) Traceable fed expenses Total traceable food expenses Product line segment margin o) Nel operating comel Required a