EXERCISE $13-2$ Dropping or Retaining a Segment LO$13-2$

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:

Management is considering discontinuing the racing bikes. 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?

The financial adventage per quarter of discontinuing the Racing Bikes is that it con reduce the losses of the Company.

I think the production and sales of racing bikes should be dis continued.