The Regal Cycle Company manufactures three types of blcycles$-$a dirt bike, 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 considering discontinulng the racing bikes. The special equipment used to produce racing bikes has no resale value

and does not wear out.

Required:

What is the financlal advantage $($disadvantage$)$ per quarter of discontinulng the Racing Bikes?

Should the production and sale of racing blkes be discontinued?

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