Exercise 13-2 (Algo) Dropping or Retaining a Segment (L013-2) 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 Bikes Bikes $929,000 $264,000 5 409,000 $ 256,000 463,000 112,000 196,000 155,000 466,000 152.000 213,000 101.000 Sales Variable manufacturing and selling expenses Contribution margin Tixed expenses Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses Net operating Incone (loss) 70,000 8,800 40,600 20,600 42,600 20,200 7,200 25,200 114,200 40,700 38,400 35,100 185,800 52.800 81.800 51,200 412,600 122,500 168.000 122,100 $ 53,400 $ 29,500 $ 45,000 $(21,100) "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? 2. 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 Required 2 Required 3 What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? Required 2 > Exercise 13-2 (Algo) Dropping or Retaining a Segment (L013-2) 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 ins Total Bike Bikes Bikes $929,000 5264,000 5 409,000 5 256.000 *65,000 212.000 196,000 155,000 465.000 152,000 213,000 .101.000 Sales Variable manufacturing and sellin expenses Contribution margin Fixed Advertising. traceable Depreciation of special quent salaries of products Allocated on the expenses Total tweden Het operating income to 70.000 0.000 40,600 20,600 42,500 20,200 7,200 15,200 114,200 40,700 30,400 35.100 165.00 $2,800 51,260 412.500 122.500 168.000 122.100 153,600 2.500 15.000 $121,180) "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 profitabilty of the various product lines. Complete this question by entering your answers in the tabs below. Required 2 Required Prepare a property formatted segmented income statement that would be more to management in assessing the long- run profitability of the various product lines Totalt Dirts Mountain Racing Telepon 0 Tags os 0 Net operating income -