Exercise 12-2 dropping or retaining a segment [lo12-2] 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: total dirt bikes mountain bikes racing bikes sales $ 927,000 $ 270,000 $ 402,000 $ 255,000 variable manufacturing and selling expenses 470,000 114,000 200,000 156,000 contribution margin 457,000 156,000 202,000 99,000 fixed expenses: advertising, traceable 69,300 8,400 40,700 20,200 depreciation of special equipment 43,000 20,300 7,500 15,200 salaries of product-line managers 114,100 40,200 38,100 35,800 allocated common fixed expenses* 185,400 54,000 80,400 51,000 total fixed expenses 411,800 122,900 166,700 122,200 net operating income (loss) $ 45,200 $ 33,100 $ 35,300 $ (23,200) *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.