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: Racing Bikes $921,000 $ 265,000 $ 402,000 $ 254,000 462,000 5,000 197,000 50,000 Dirt Bikes Mountain Bikes Total Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses 459,000 0,000 205,000 104,000 Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses 69,500 43,800 114,700 184,200 8,900 20,900 40,600 53,000 40,400 7,300 38,200 80,400 20,200 15,600 35,900 50,800 Total fixed expenses 412,200 123,400 166,300 22,500 Net operating income (loss) S 46,800 S 26,600 S 38,700 S (18,500) Allocated on the basis of sales dollars Management is concerned about the continued losses shown by the racing bikes and wantsa 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.) Difference: Net Total If Racing Bikes Are Dropped Operat ting Income Current Total Increase or (Decrease) es ariable manufacturing and selling expenses Contribution margin (loss) Fixed expenses Advertising, traceable Depreciation on special equipment aries of product managers Total fixed expenses Net operating income (loss)