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:

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: Dirt Bikes Mountain Racing Bikes $ 932,000 $264,000 $409,000 $259,000 Variable manufacturing and selling expenses 467,000 116,000 194,000 157,000 Total Bikes Sales Contribution margin 465,000 148,000 215,000 102,000 Fixed expenses Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* 69,500 43,800 21,000 114,700 20,700 7,100 15,700 35,700 8,400 40,400 40,300 38,700 186,400 52,800 81,800 51,800 414,400 122,500 168,000 123,900 $ 50,600 25,500 $ 47,000 $ (21,900) Total fixed expenses Net operating income (loss) 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.) Total If Racing Bikes Are Dropped Difference: Net Operating Income Increase or (Decrease) Current Total Sales Variable manufacturing and selling expenses Contribution margin (loss) 932,000 467,000 465,000 Search the web and Windows