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	$	925,000	$	263,000	$	410,000	$	252,000
Variable manufacturing and selling expenses		477,000		120,000		197,000		160,000
Contribution margin		448,000		143,000		213,000		92,000
Fixed expenses:
Advertising, traceable		69,400		8,100		40,500		20,800
Depreciation of special equipment		43,700		20,900		7,500		15,300
Salaries of product-line managers		116,100		41,000		38,500		36,600
Allocated common fixed expenses*		185,000		52,600		82,000		50,400
Total fixed expenses		414,200		122,600		168,500		123,100
Net operating income (loss)	$	33,800	$	20,400	$	44,500	$	(31,100)

*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.)
	current total total if racing bikes are dropped difference: net operating income up/down 2. should production and sale of the bikes be discontinued? yes or no 3. prepare a segmented income statement 4. would a segmented income statement format be more useful to management in assesing the long-run profitability of the various product lines? yes or no