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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 $ 928,000 $ 268,000 $ 408,000 $ 252,000 Variable manufacturing and selling expenses 458,000 113,000 192,000 153,000 Contribution margin 470,000 155,000 216,000 99,000 Fixed expenses: Advertising, traceable 69,200 8,600 40,500 20,100 Depreciation of special equipment 43,300 20,800 7,200 15,300 Salaries of product-line managers 113,600 40,200 38,100 35,300 Allocated common fixed expenses* 185,600 53,600 81,600 50,400 Total fixed expenses 411,700 123,200 167,400 121,100 Net operating income (loss) $ 58,300 $ 31,800 $ 48,600 $ (22,100) *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.

Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

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