Data table A C D 1 2 3 4 Deluxe Safety Product Line Contribution Margin Income Statement For the Year Product lines Industrial Household 6 7 Sales revenue Systems Systems Company Total $ 280,000 $ 390,000 $ 670,000 8 Less cost of goods sold: 9 Variable 39,000 48,000 87.000 10 Fixed 240,000 69.000 309,000 11 Gross profit 1,000 $ 273,000 $ 274,000 Less marketing and administrative 12 expenses: 13 Variable 67,000 74,000 141,000 14 Fixed 45,000 25,000 70,000 15 Operating income (loss) $ (111,000) $ 174,000 $ 63,000 Requirements 1. Prepare an incremental analysis to show whether Deluxe Safety should discontinue the industrial systems product line. 2. Prepare contribution margin income statements to show Deluxe Safety'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 alternatives income numbers to your answer to Requirement 1. What have you learned from this comparison? Print Done Requirement 1. Prepare an incremental analysis to show whether Deluxe Safety should discontinue the industrial systems product line. Incremental Analysis for Discontinuation Decision Contribution margin lost if Industrial Systems is discontinued Less: Fixed cost savings if Industrial Systems is discontinued Operating income if Industrial Systems is discontinued Total Requirement 2. Prepare contribution margin income statements to show Deluxe Safety'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 alternatives' income numbers to your answer to Requirement 1. What have you leamed from this comparison? Begin by preparing the statements with and without the industrial systems line, then prepare the contribution margin income statement showing the decrease if the industrial systems line is discontinued. (Use parentheses or a minus sign for an operating loss.) Deluxe Safety Total Analysis of Discontinuing a Product Line Members of the board of directors of Deluxe Safety have received the ollowing 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 s losing money. They commission a study to determine whether the company should discontinue the line. point(s) possible Company accountants estimate that discontinu systems line will decrease fixed cost of goods s decrease fixed marketing and administrative ex Read the requirements Sales revenue Variable expenses Deluxe Safety Total Analysis of Discontinuing a Product Line Cost of goods sold Marketing and administrative expense Total variable expenses Contribution margin Fixed expenses Cost of goods sold Totals With Industrial Systems Totals Without Industrial Systems Difference Members of the board of directors of Deluxe Safety 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. Company accountants estimate that discontinuing the industrial systems line will decrease fixed cost of goods sold by $78,000 and decrease fixed marketing and administrative expenses by $9,000. Read the requirements Total variable expenses Contribution margin Fixed expenses: Cost of goods sold Marketing and administrative expense Total fixed expenses Operating income (loss) 5 What have you learned from this comparison? The operating income difference calculated on the total analysis of discontinuing a product line income if Deluxe Safety discontinues the industrial systems product line, as shown in Requirement 1. This demonstrates that the incremental analysis approach in Requirement 1 yields compares total operating income under the two alternatives the expected decrease in operating results as the longer approach in Requirement 2 that