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 $ 927,000 $ 265,000 $ 407,000 $ 255,000 Variable manufacturing and selling expenses 456,000 112,000 193,000 151,000 Contribution margin 471,000 153,000 214,000 104,000 Fixed expenses: Advertising, traceable 69,600 8,300 40,500 20,800 Depreciation of special equipment 44,000 20,300 7,800 15,900 Salaries of product-line managers 114,500 40,200 38,500 35,800 Allocated common fixed expenses* 185,400 53,000 81,400 51,000 Total fixed expenses 413,500 121,800 168,200 123,500 Net operating income (loss) $ 57,500 $ 31,200 $ 45,800 $ (19,500) *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.) 1b. Should production and sale of the racing bikes be discontinued? Yes No 2a. Prepare a segmented income statement.