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 $ 916,000 $ 265,000 $ 400,000 $ 251,000 Variable manufacturing and selling expenses 475,000 115,000 201,000 159,000 Contribution margin 441,000 150,000 199,000 92,000 Fixed expenses: Advertising, traceable 70,300 8,700 41,000 20,600 Depreciation of special equipment 43,600 20,800 7,600 15,200 Salaries of product-line managers 115,600 40,900 38,900 35,800 Allocated common fixed expenses* 183,200 53,000 80,000 50,200 Total fixed expenses 412,700 123,400 167,500 121,800 Net operating income (loss) $ 28,300 $ 26,600 $ 31,500 $ (29,800) *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? multiple choice 1 Yes No 2a. Prepare a segmented income statement. 2b. Would a segmented income statement format be more usable to management in assessing the long-run profitability of the various product lines. multiple choice 2 Yes No