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. Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total fixed expenses " Net operating income (loss) "Allocated on the basis of sales dollars Total $ 923,000 466,000 Dirt Bikes $264,000 $401,000 Mountain Bikes Racing Bikes $258,000 111,000 201,000 154,000 457,000 153,000 200,000 104,000 69,800 8,500 40,700 20,600 43.500 20,000 7,300 15,400 114,300 40,500 38,000 35,000 184,600 $2,800 80,200 51,600 412,200 $44,800 123,600 $30,400 167,006 122,600 $ 33,000 $ (18,600) 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.