1Data Table Security Alarms Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total Net Sales Revenue $ 350,000 $ 390,000 740,000 Cost of Goods Sold: 9,000 82,000 64,000 314,000 113,000 396,000 277,000 344,000 Variable Fixed Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses 33,000 250,000 283,000 67,000 Variable 77,000 145,000 25,000 68,000 102,000 213,000 $ (44,000) $175,000 $ 131,000 68,000 43,000 111,000 Fixed Total Selling and Administrative Expenses Operating Income (Loss) Print Done Members of the board of directors of Security Alarms have received the following operating income data for the year ended May 31, 2018 EEB (Click the icon to view the operating income data.) Members of the board are surprised that the industrial systems product line is not profitable. They commission a study to determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fxed cost of goods sold by $80,000 and decrease fixed selling and administrative expenses by $14,000. Read the requirements. EApEcieu ueiedse in opcrating income Requirement 2. Prepare contribution margin income statements to show Security Alarm's total operating income under the two alternatives: (a) with the industrial systems line and (b) withcut the line. Compare the difference between the two alternatives' income numbers to your answer to Requirement 1. (Use parentheses or a minus sign for an operating loss.) Security Alarms Requirements tribution Margin Income Statement For the Year Ended May 31, 2018 Cont 1. Prepare a differential analysis to show whether Security Alarms should drop the industrial systems product line. Prepare contribution margin income statements to show Security Alarm's total operating income under the two aiternatives: (a) with the industrial systems line and (b) without the line. Compare the difference between the two alternatives' income numbers to your answer to Requirement 1 What have you learned from the comparison in Requirement 2? Totals With Totals Without Change if Industrial Systems Is Dropped Industrial Systems Industrial Systems 2. Net Sales Revenue Variable Costs: 3. Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs PrintDone Selling and Administrative Total Fixed Costs Operating Income (Loss)