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: Racing Bikes $928,000 264,000 $ 409,000 $ 255,000 158,000 Dirt Mountain Total 472,000 456,000 Bikes 119,000 145,000 Bikes 195,000 214,000 Sales Variable manufacturing and selling expenses Contribution margin 97,000 Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 69,900 43,500 115,100 185,600 8,700 20,200 40,700 52,800 40,900 7,800 38,600 81,800 20,300 15,500 35,800 51,000 Total fixed expenses 414,100 122,400 169,100 122,600 Net operating income (loss) $ 41,900 $ 22,600 $ 44,900 $ (25,600) 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