fthe board of directors of Safety Step have received the following operating income data for the year ended May 31, 2018 Members E(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 detemine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $83,000 and decrease fixed selling and administrative expenses S10,000. Read the reguirements. Requirement 2. Prepare contribution margin income statements to show Safety Step'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. (Use parentheses or a minus sign for a operating loss.) Data Table Safety Step Contribution Margin Income Statement For the Year Ended May 31, 2018 Safety Step Totals With Totals Without Change if Industrial Income Statement Industrial Systems Industrial Systems Systems Is Dropped For the Year Ended May 31, 2018 Net Sales Revenue 330,000 Product Line Variable Costs: Household Industrial 43,000 Manufacturing Total Systems Systems 72.000 Selling and Administrative Net Sales Revenue 310,000 $ 330,000 $ 640.000 Total Variable Costs Cost of Goods Sold: Contribution Margin Variable 34,000 43,000 77.000 Fixed Costs: 240.000 64.000 304.000 Fixed Manufacturing 274,000 107,000 381.000 Total Cost of Goods Sold Selling and Administrative 36.000 259,000 Gross Profit 223.000 Total Fixed Costs Selling and Administrative Expenses: Operating Income (Loss) Variable 65,000 72,000 137,000 39.000 28.000 67,000 Fixed Enter any number in the edit fields and then click Check Answer 104,000 100,000 204.000 Total Selling and Administrative Expenses (68,000) $ 123.000 S 55.000 part maining Clear All Operating Income (Loss) Members of the board of directors of Safety Step have received the following operating income data for the year ended May 31, 2018 E(Click the icon to view the operating income data.) to determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $83.000 and decrease fixed selling and administrative expenses by $10,00o. Read the reguirements. show whether Safety Step should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.) Requirement 1, Prepare a differential analysis (310,000) Expected decrease in revenues Requirements Expected decrease in total variable costs S 99,000 93.000 Expected decrease in fixed costs 1 Prepare a differential analysis to show whether Safety Step should drop the industrial systems product line. 192.000 Expected decrease in total costs $ (118,000) Expected decrease in operating income show Safety Step's total operating income under the two alternatives: (a) with the industrial systems line and (b) without the line. Compare your answer to Requirement 1. 2. Prepare contribution margin income statements Reguirement 2, Prepare contribution altematives' income numbers to your answer to Requirement 1. (Use parentheses or a minus sign for an cperating loss income statements to show Safety Step's total o income he two 3. What have vou learned from the comparison in Requirement 2? Safety Step Contribution Margin Income Statement Print Done For the Year Ended May 31, 2018 Change if Industrial Totals With Totals Without Systems Is Dropped Industrial Systems Industrial Systems 330,000 Net Sales Revenue Variable Costs 43.000 Manufacturing 72.000 Selling and Administrative Enter any number in the edit fields and then click Check
