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The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the

The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

Total Dirt Bikes Mountain Bikes Racing Bikes
Sales $ 932,000 $ 269,000 $ 405,000 $ 258,000
Variable manufacturing and selling expenses 483,000 118,000 209,000 156,000
Contribution margin 449,000 151,000 196,000 102,000
Fixed expenses:
Advertising, traceable 69,500 8,300 40,800 20,400
Depreciation of special equipment 43,500 21,000 7,300 15,200
Salaries of product-line managers 114,700 40,800 38,000 35,900
Allocated common fixed expenses* 186,400 53,800 81,000 51,600
Total fixed expenses 414,100 123,900 167,100 123,100
Net operating income (loss) $ 34,900 $ 27,100 $ 28,900 $ (21,100)

*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.

Financial ( disadvantage) per quarter?

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