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 $ 926,000 466,000 460,000 Dirt Bikes $ 266,000 118,000 148,000 Mountain Bikes $ 406,000 195,000 Racing Bikes $ 254,000 211,000 153,000 101,000 70,500 8,900 40,800 20,800 43,800 20,600 7,500 15,700 115,500 40,900 38,200 36,400 185,200 53,200 81,200 50,800 415,000 123,600 167,700 123,700 $ 45,000 $ 24,400 $ 43,300 $ (22,700) 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. Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 2. Should the production and sale of racing bikes be discontinued?