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 Bikes Mountain Racing Bikes $927,000 269,000 406,000 252,000 473,000114,000 204,000 155,000 Total Bikes Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: 454,000 155,000 202,000 97,000 9,000 1,000 20,800 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 70,8009, 44,000 21,000 113,800 7,40015,600 35,100 81,200 50,400 38,500 40,200 53,800 185,400 Total fixed expenses 414,000 124,000 168,100 121,900 Net operating income (loss) $ 40,000 31,000 .33,900 (24,900) 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