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			$	265,000			$	402,000			$	259,000
Variable manufacturing and selling expenses		463,000				120,000				192,000				151,000
Contribution margin		463,000				145,000				210,000				108,000
Fixed expenses:
Advertising, traceable		69,500				8,500				40,400				20,600
Depreciation of special equipment		43,300				20,300				7,200				15,800
Salaries of product-line managers		115,800				40,900				38,700				36,200
Allocated common fixed expenses*		185,200				53,000				80,400				51,800
Total fixed expenses		413,800				122,700				166,700				124,400
Net operating income (loss)	$	49,200			$	22,300			$	43,300			$	(16,400)

*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? (Decreases should be indicated by a minus sign.)

1b. Should production and sale of the racing bikes be discontinued?

	Yes
	No