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he Regal Cycle Company manufactures three types of bicycles a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for

he Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:
Total Dirt Bikes Mountain Bikes Racing Bikes
Sales $ 935,000 $ 269,000 $ 406,000 $ 260,000
Variable manufacturing and selling expenses 469,000117,000197,000155,000
Contribution margin 466,000152,000209,000105,000
Fixed expenses:
Advertising, traceable 70,0008,50040,80020,700
Depreciation of special equipment 44,50020,5008,00016,000
Salaries of product-line managers 115,50040,20038,30037,000
Allocated common fixed expenses*187,00053,80081,20052,000
Total fixed expenses 417,000123,000168,300125,700
Net operating income (loss) $ 49,000 $ 29,000 $ 40,700 $ (20,700)
*Allocated on the basis of sales dollars.
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?

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