Homework: Chapter 25 Homework Save Score: 0.72 of 1 pt 2 of 3 (3 complete) HW Score: 81.28%, 2.44 of 3 pts %x P25-23A (similar to) Question Help Members of the board of directors of Safety Place have received the following operating income data for the year ended May 31, 2018: (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 fixed cost of goods sold by $84,000 and decrease fixed selling and administrative expenses by $10,000. Read the requirements. i Data Table Requirement 1. Prepare a differential analysis to show whether Safety Place should drop the industrial systems product line. 330000 Expected decrease in revenues Expected decrease in total variable costs For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total $ 330,000 $ 360,000 $ 690,000 Expected decrease in fixed costs Expected decrease in total costs Expected decrease in operating income Net Sales Revenue Cost of Goods Sold: Variable 39,000 250,000 49,000 66,000 88,000 316,000 i Requirements Fixed 289,000 115,000 404,000 41,000 245,000 286,000 1. Prepare a differential analysis to show whether Safety Place should drop the industrial systems product line. 2. Prepare contribution margin income statements to show Safety Place'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. 3. What have you learned from the comparison in Requirement 2? Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses: Variable 63,000 39,000 Fixed Choose | 72,000 29,000 101,000 144,000 $ 135,000 68,000 203,000 83,000 Total Selling and Administrative Expenses 102,000 (61,000) $ $ 2 parts Operating Income (Loss) 2 remai ear Print Pont Done Done Carter olieann naf Show All