Company accountants estimate that discontinuing the industrial systems line will decrease fixed cost of goods sold by 583.000 and decrease fixed marketing and administrative expenses by 59.000 Members of the board of directors of Security First have received the following operating income data for the year just ended: (Click the icon to view the operating income cata.) 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 discontinue the line. - X Data table D 1 1 Requirement 1. Prepare an incremental analysis to show whether Security First should discontinue the industrial systems prode Incremental Analysis for Discontinuation Decision Total Contribution margin lost if Industrial Systems is discontinued A B Security First Product Line Contribution Margin Income Statement For the Year 2 3 3 Less: Fixed cost savings if Industrial Systems is discontinued 4 Operating income if Industrial Systems is discontinued 6 Product lines Industrial Household Company Systems Systems Total $ 360,000 $ 390,000 $750,000 7 Sales revenue 8 Less cost of goods sold 9 Variable 10 Fixed 31,000 270,000 41,000 72.000 61,000 331,000 288,000 $347.000 $ 59,000 $ 11 Gross profit 12 Less marketing and administrative expenses: 13 Variable 60,0001 70,000 130,000 14 Fixed 42,000 27,000 69,000 191,000 $ 148,000 15 Operating income (loss) $ (43,000) $ Print Done Help me solve this Video Get more help Company accountants estimate that discontinuing the industrial systems line will decrease fixed cost of goods sold by 583.000 and decrease fixed marketing and administrative expenses by 59.000 Members of the board of directors of Security First have received the following operating income data for the year just ended: (Click the icon to view the operating income data.) 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 discontinue the line. Read the requirements Requirements Requirement 1. Prepare an incremental analysis to show whether Security First should discontinue the industrial systems product line. Incremental Analysis for Discontinuation Decision Total Contribution margin lost if Industrial Systems is discontinued - X Requirements Less: Fixed cost savings If Industrial Systems Is discontinued Operating income if Industrial Systems is discontinued 1. Prepare an incremental analysis to show whether Security First should discontinue the industrial systems product line. 2. Prepare contribution margin income statements to show Security First'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 alteratives income numbers to your answer to Requirement 1. What have you leamed from this comparison? Print Done Help me solve this Video Get more help. ) Clear all Check
