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 Mountain Total Bikes Bikes Bikes 932,000 265,000 407,000 260,000 Sales 118,000 Variable manufacturing and selling expenses 473,000 195,000 160.000 459,000 147,000 212,000 100.000 Contribution margin Fixed expenses: 69,700 21,000 Advertising, traceable 8.500 40.200 Depreciation of special equipment 42,700 20,300 7.200 15.200 114,500 Salaries of product-line managers 40,600 38,700 35.200 53,000 52,000 186,400 Allocated common fixed expenses 81,400 Total fixed expenses 413,300 122,400 167,500 123,400 45,700 24,600 44,500 (23,400) Net operating income (loss) *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 1a. What is the impact on net operating income by discontinuing racing bikes? (Decreases should be indicated by a minus sign.) Difference: Net Total If Racing Operating Income Current Total Bikes Are Increase or Dropped (Decrease) Contribution margin (loss) Fixed expenses: Total fixed expenses Net operating income (loss)