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: Dirt Bikes Mountain Racing Bikes $930,000 266,000 $ 408,000 $ 256,000 157,000 Total 482,000 448,000 Bikes Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses 117,000 208,000 149,000 200,000 99,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 69,200 43,100 114,900 186,000 8,100 20,400 40,500 53,200 40,800 7,200 38,700 81,600 20,300 15,500 35,700 51,200 Total fixed expenses 413,200 122,200168,300 22,700 Net operating income (loss) $ 34,800 26,800 31,700 (23,700) 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 Bikes Are Operating Income Increase or (Decrease) Current Total Dropped Contribution margin (loss) Fixed expenses Total fixed expenses Net operating income (loss)