PLEASE HELP SOLVE 1a. and 2a.

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	$	262,000	$	405,000	$	259,000
Variable manufacturing and selling expenses		464,000		114,000		196,000		154,000
Contribution margin		462,000		148,000		209,000		105,000
Fixed expenses:
Advertising, traceable		69,800		8,800		40,300		20,700
Depreciation of special equipment		43,400		20,400		7,300		15,700
Salaries of product-line managers		115,200		40,800		38,600		35,800
Allocated common fixed expenses*		185,200		52,400		81,000		51,800
Total fixed expenses		413,600		122,400		167,200		124,000
Net operating income (loss)	$	48,400	$	25,600	$	41,800	$	(19,000)

*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 riable manufacturing and selling expenses Contribution margin (loss) 0 0 0 Fixed expenses Advertising, traceable Depreciation on special equipment Salaries of product managers Common allocated costs Total fixed expenses 0 Net operating income (loss) 1b. Should production and sale of the racing bikes be discontinued? O Yes 2a. Prepare a segmented income statement. Totals Dirt Bikes Mountain Bikes Racing Bikes Sales riable manufacturing and selling expenses Contribution margin (loss) Traceable fixed expenses 0 Advertising Depreciation of special equipment Salaries of the product line managers Total traceable fixed expenses Product line segment margin Common fixed expenses Net operating income (loss)