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cle Company manufactures three types of bicycles a dirt bike, a mountain bike, and a rac- The Regal Cy ing bike. Data on sales and expenses for the past quarter follow: Mountain Racing $300,000 $90,000 $150,000 $60,000 180,000 63,000 90,000 27,000 Dirt Bikes Total Bikes Bikes Sales. Variable manufacturing and selling expenses Contribution margin 1 20,000 27.000 60,000 33,000 Fixed expenses: 30,000 10,000 14,000 6,000 9,000 8,000 35,000 12,000 13,000 10,000 60,000 18,000 30,000 12,000 148,000 46,000 66,000 36,000 Depreciation of special equipment . . . 23,000 6,000 Salaries of product-line managers Allocated common fixed expenses. . Total fixed expenses. . Net operating income (loss0000 24,000 (9000) Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants a recommenda- tion 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: 1. Should production and sale of the racing bikes be discontinued? Explain. Show computations to support your answer. Recast the above data in a format that would be more usable to management in assessing the long-run 2. profitability of the various product lines