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 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:

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.

Complete this question by entering your answers in the tabs below.

Required $2$

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.

$\backslash$table$[[,$Totals,Dirt Bikes,Mountain Bikes,Racing Bikes$],[$Contribution margin $($loss$),0,0,0,0],[$Traceable fixed expenses:$],[,,,,],[,,,,],[,,,,],[$Total traceable fixed expenses,$0,0,0,0],[$Product line segment margin $($loss$),0,$$$,0,$$