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	$	921,000	$	261,000	$	407,000	$	253,000
Variable manufacturing and selling expenses		465,000		111,000		203,000		151,000
Contribution margin		456,000		150,000		204,000		102,000
Fixed expenses:
Advertising, traceable		69,400		8,300		41,000		20,100
Depreciation of special equipment		44,000		20,600		7,500		15,900
Salaries of product-line managers		115,400		40,900		38,200		36,300
Allocated common fixed expenses*		184,200		52,200		81,400		50,600
Total fixed expenses		413,000		122,000		168,100		122,900
Net operating income (loss)	$	43,000	$	28,000	$	35,900	$	(20,900)

*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.)

2a.	Prepare a segmented income statement.