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i'm wondering if i did this question correctly. please respond with corrections if you see an error. thank you! ud Members of the board of
i'm wondering if i did this question correctly. please respond with corrections if you see an error. thank you!
ud Members of the board of directors of Security Force 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 ine will decrease fixed cost of goods sold by 580,000 and decrease fixed marketing and administrative expenses by 512.000 su Read the requirements par Requirement 1. Prepare an incremental analysis to show whether Securty Force should discontinue the industrial systems product line Jult Incremental Analysis for Discontinuation Decision Contribution margin lost it Industrial Systems is discontinued Total hap 175000 98000 Less Fixed cost savings of Industrial Systems is discontinued Operating income 1051 Industrial Systems is discontinued 77000 Requirement 2. Prepare contribution margincome statements to show Security Force'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 What have you learned from this comparison? Begin by prepanng the statements with and without the industrial systems in the prepare the contribution margin income statement showing the decrease it the industrial systems fines discontinued (arentheses or a minus sign for operating loss) Security Force Total Analysis of Discontinuing a Product Line Totals with industrial Systems 200000 Totals Without Industrial Systems 310000 Difference 30000 Sales revenu Vanable expenses Cost of goods sold 30000 21000 5000 Time Remaining: 00 36 46 Next Data table B C D 1 2. Security Force 2 Product Line Contribution Margin Income Statement 3 For the Year 4 Product lines Industrial Household Systems Systems 6 Company Total 7 Sales revenue 3 280.000 $ 310,000 $ 590,000 00 8 Less cost of goods sold: Variable D e 36.000 41000 771.000 10 Fixed 220,000 60.000 280.000 11 Gross profit s 24,000 $ 200,000 $ 233 000 12 Less marketing and administrative expenses 13 Variable 80.000 140.000 14 Fixed 71.000 27.000 62.000 36.000 181.000 15 Operating income (loss 111.000s 30 000 Print Done question: 20 point($) possible Members of the board of directors of Security Force 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 foxed cost of goods sold by $30,000 and decrease fixed marketing and administrative expenses by $12,000, Read the requirements Totals Without Totals With Industrial Systems 280000 Sales revenue Industrial Systems 310000 Difference 30000 P Variable expenses Cost of goods sold 36000 41000 5000 000001 Marketing and administrative expense 71000 2000 105000 112000 Total variable expenses 7000 175000 198000 23000 Contribution margin Faced expenses Cost of goods sold 220000 60000 100000 30000 27000 -9000 Marketing and administrative expense 250000 87000 -100000 Total fixed expenses -81000 111000 140000 Operating income closs What have you learned from this comparison The operating income difference calolated on the total analysis of discontinuing a product line does not gua the expected decrease in operating income if Security Force discontinues the industrial systems product line as shown in Requirement This demonstrates that the incremental analysis approach in Requirement 1 yields a Merent results as the longer approach in Requirement 2 that compares total operating income under the two alternatives Time Remaining: 00 3532 Next Step by Step Solution
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