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 471,000 460,000 Bikes 111,000 157,000 Bikes 209,000 196,000 Bikes 151,000 107,000 Sales $931,000 $ 268,000 $ 405,000 $ 258,000 Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 70,100 43,700 115,700 186,200 8,500 20,800 40,500 53,600 40,900 7,200 39,000 81,000 20,700 15,700 36,200 51,600 Total fixed expenses 415,700 123,400 168,100 124,200 Net operating income (loss) $44,300 $ 33,600 $ 27,900 $ (17,200) Allocated on the basis of sales dollars Management is concerned 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