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	$	926,000	$	267,000	$	404,000	$	255,000
Variable manufacturing and selling expenses	467,000	110,000	204,000	153,000
Contribution margin	459,000	157,000	200,000	102,000
Fixed expenses:
Advertising, traceable	69,900	8,800	40,200	20,900
Depreciation of special equipment	44,600	20,900	7,800	15,900
Salaries of product-line managers	115,800	41,000	38,400	36,400
Allocated common fixed expenses*	185,200	53,400	80,800	51,000
Total fixed expenses	415,500	124,100	167,200	124,200
Net operating income (loss)	$	43,500	$	32,900	$	32,800	$	(22,200)

*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.

2b.	Would a segmented income statement format be more usable to management in assessing the long-run profitability of the various product lines.
Yes No