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	$	924,000	$	263,000	$	408,000	$	253,000
Variable manufacturing and selling expenses		470,000		120,000		194,000		156,000
Contribution margin		454,000		143,000		214,000		97,000
Fixed expenses:
Advertising, traceable		70,200		8,900		40,900		20,400
Depreciation of special equipment		44,200		20,600		7,800		15,800
Salaries of product-line managers		115,100		40,200		39,000		35,900
Allocated common fixed expenses*		184,800		52,600		81,600		50,600
Total fixed expenses		414,300		122,300		169,300		122,700
Net operating income (loss)	$	39,700	$	20,700	$	44,700	$	(25,700)

*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.)

	Current total	total if racing bikes are dropped	Difference: Net operating income increase or (Decrease)
?	?	?	?
?	?	?	?
Contribution margin: (loss)	?	?	?
Fixed expense:	-	-	-
?	?	?	?
?	?	?	?
?	?	?	?
?	?	?	?
Total fixed expenses	?	?	?
Net operating income (loss)	?	?	?

b.	Prepare a segmented income statement.

	Totals	Dirt Bike	Mountain Bikes	Racing Bikes
?	?	?	?	?
?	?	?	?	?
Contribution margin (loss)	?	?	?	?
Traceable fixed expenses:	-	-	-	-
?	?	?	?	?
?	?	?	?	?
?	?	?	?	?
Total traceable fixed expenses	?	?	?	?
?	?	?	?	?
?	?	-	-	-
Net operating income (loss)	?	-	-	-