$*3$ Parts$*$

Members of the board of directors of Swat Security have received the following operating income data for the year ended May $31,2025$:

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 fixed cost of goods sold by $$81,000$ and decrease fixed selling and administrative expenses by $$10,000.$

Read the requirements.

Requirement $1.$ Prepare a differential analysis to show whether Swat Security should drop the industrial systems product line. $($Use parentheses or a minus sign to enter decreases to profits.$)$

Requirements

Prepare a differential analysis to show whether Swat Security should drop the industrial systems

product line.

Prepare contribution margin income statements to show Swat Security's total operating income

under the two alternatives: $($a$)$ with the industrial systems line and $($b$)$ without the line. Compare

the difference between the two altematives' income numbers to your answer to Requirement $1.$

What have you learned from the comparison in Requirement $2?$

Operating Income Data