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:

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 Mountain Racing Tota Bikes Bikes Bikes Sales 923,000 270,000 402,000 251,000 151,000 Variable manufacturing and selling expenses 470,000 115,000 204,000 Contribution margin 453,000 155,000 198,000 100,000 Fixed expenses: 40,200 20,400 8,800 Advertising, traceable 69,400 43,700 20,400 Depreciation of special equipment 7,800 15,500 36,800 115,800 39,000 Salaries of product-line managers 40,000 50,200 Allocated common fixed expenses 184,600 80,400 54,000 Total fixed expenses 413,500 123,200 167,400 122,900 Net operating income (loss) 39,500 31,800 30,600 (22,900) *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: la. What is the impact on net operating income by discontinuing racing bikes? (Decreases should be indicated by a minus sign.) Difference: Net Total If Operating Current Total Racing Bikes Income Are Dropped increase or (Decrease) Contribution margin (loss) Fixed expenses: Total fixed expenses Net operating income (loss)