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: Joints Dirt Mountain Racing Total Bikes Bikes Bikes $ 917,000 $264,000 $401,000 $252,000 458,000 111,000 191,000 156,000 Sales Variable manufacturing and selling expenses eBook Hint Print Contribution margin 459.000 153.00 210.000 96,000 References Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses" 70,000 43,900 115,100 183,400 8,600 20,900 40,700 52.800 40,800 7,300 38,500 80,200 20,600 15,700 35,900 50,400 Total fixed expenses 123,000 1669 166,800 122,600 Net operating income (loss) $ 46,600 $30,000 $ 43,200 $ (26,600) "Allocated on the basis of sales dollars. "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. 4 points eBook Required: 1a. What is the impact on net operating income by discontinuing racing bikes? (Decreases should be indicated by a minus sign.) Hint Print Total If Current Total Racing Bikes Are Dropped Difference: Net Operating Income Increase or (Decrease) Contribution margin (loss) Fixed expenses: 111 Total fixed expenses Net operating income (loss) 1b. Should production and sale of the racing bikes be discontinued? Yes No 2a. Prepare a segmented income statement. Totals Dirt Bikes Mountain Bikes Racing Bikes Contribution margin (loss) Traceable fixed expenses: Total traceable fixed expenses Not operating income (loss) 2b. Would a segmented income statement format be more usable to management in assessing the long-run profitability of the various product lines. Yes ONo