Megah Holding Sdn Bhd sells two types of bicycles, mountain bike and road bike. The company is considering dropping the road bike. It is expected that sales of mountain bikes will increase by 40% as a result. Dropping road bikes will allow the company to cancel its monthly equipment rental costing RM200.00 per month. The other existing equipment will be used for additional production of mountain bikes. One employee earning RM500.00 per month can be terminated if road bike production is dropped. Megah Holding's other fixed costs are allocated and will continue regardless of the decision made. An excerpt from the budgeted monthly income statement with both products follows:

	Mountain Bike (RM)	Road Bike (RM)	Total (RM)
Sales	10,000.00	8,000.00	18,000.00
Direct materials	2,500.00	2,000.00	4,500.00
Direct labor	2,000.00	1,200.00	3,200.00
Equipment rental	300.00	2,600.00	2,900.00
Other allocated overhead	1,000.00	2,100.00	3,100.00
Operating income	4,200.00	100.00	4,300.00

REQUIRED:

Prepare an incremental analysis to determine the financial effect of dropping a road bike.