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:

$*$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

not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not we

out.

Required:

What is the financial advantage $($disadvantage$)$ per quarter of discontinuing the Racing Bikes?

Should the production and sale of racing bikes be discontinued?

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.

Answer is complete but not entirely correct.

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?