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:

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: Dirt Mountain Racing Total Bikes Bikes Bikes 300,000 $ 90,000 $150,000 $ 60,000 60,000 33,000 Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: 120,000 27,000 80,000 63,000 90,000 27,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses 0,000 10,000 14,000 6,000 23,000 6,000 9,000 8,000 35,000 12,000 13,000 10,000 60,000 18,000 30,000 12,000 Total fixed expenses 148,000 46,000 66,000 36,000 Net operating income (loss) s 32,000 S 17,000 $ 24,000 $ (9,000) Allocated on the basis of sales dollars Management is concemed 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