Lost contribution margin $(27,000)
Fixed costs that can be avoided:
Advertising, traceable $ 6,000
Salary of the product line manager 10,000 16,000
Decrease in net operating income for the company as a whole $(11,000)
The depreciation of the special equipment is a sunk cost and is not relevant to the decision. The common costs are allocated and will continue regardless of whether or not the racing bikes are discontinued; thus, they are not relevant to the decision.