The Regal Cycle Company manufactures three types of blcycles$-$a dirt blke, a mountain blke, and a racing blke. 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.

Requlred:

What is the financlal advantage $($dlsadvantage$)$ per quarter of discontinulng 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 varlous product lines.

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

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.