P26-2B Members of the board of directors of Energy Saver Electric, Inc., have received the following operating income data for the year just ended, shown at the top of the next page. Members of the board are surprised that the industrial-systems product line is losing money. They commission a study to determine whether the company should drop the industrial-systems line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $95,000 and decrease fixed marketing and administrative expenses by $15,000. Required 1. Prepare an incremental analysis to show whether Energy Saver should drop the indus trial-systems product line. 2. Prepare a total analysis to show Energy Saver's operating income with and without industrial systems. Prepare the income statement in contribution-margin format.. 3. Explain the difference between correct analysis and incorrect analysis of the decision to keep or drop the industrial-systems product line. Industrial Systems Household Systems Total Sales revenue Cost of goods sold: Variable. $405,000 $421,000 $826,000 $ 50,000 $ 55,000 $105,000 Fixed. 241,000 86,000 327.000 Total cost of goods sold 291.000 141.000 432,000 Gross profit. 114.000 280,000 394.000 Marketing and administrative expenses: Variable 86.000 92,000 178,000 Fixed 58,000 31,000 89,000 Total marketing and administrative expenses 144,000 123,000 267,000 Operating income (loss) $ (30.000) $157.000 $127,000