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	$	920,000	$	261,000	$	403,000	$	256,000
Variable manufacturing and selling expenses		459,000		112,000		194,000		153,000
Contribution margin		461,000		149,000		209,000		103,000
Fixed expenses:
Advertising, traceable		70,000		8,200		40,900		20,900
Depreciation of special equipment		43,900		20,500		8,000		15,400
Salaries of product-line managers		115,100		40,300		38,800		36,000
Allocated common fixed expenses*		184,000		52,200		80,600		51,200
Total fixed expenses		413,000		121,200		168,300		123,500
Net operating income (loss)	$	48,000	$	27,800	$	40,700	$	(20,500)

*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.

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.