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	$	924,000	$	270,000	$	403,000	$	251,000
Variable manufacturing and selling expenses		476,000		120,000		196,000		160,000
Contribution margin		448,000		150,000		207,000		91,000
Fixed expenses:
Advertising, traceable		69,000		8,100		40,300		20,600
Depreciation of special equipment		43,500		20,500		7,700		15,300
Salaries of product-line managers		114,400		40,300		38,800		35,300
Allocated common fixed expenses*		184,800		54,000		80,600		50,200
Total fixed expenses		411,700		122,900		167,400		121,400
Net operating income (loss)	$	36,300	$	27,100	$	39,600	$	(30,400)

*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