members of the board are surprised that the industrial system 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 fix cost goods sold by $80,000 in decrease fixed selling and administrative expenses to $14,000.

Requirements 1. Prepare a differential analysis to show whether Security One should drop the industrial systems product line. 2. Prepare contribution margin income statements to show Security One'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? Print Done for the year ended May 31, 2018: mmission a study to determine whether the company should drop the line. Company accountants estimate that dropping ind wrial systo Data Table Security One Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total $ 330,000 $ 360,000 $ 690,000 Net Sales Revenue Cost of Goods Sold: Variable 36,000 230,000 48,000 62.000 84.000 292,000 Fixed Total Cost of Goods Sold 266,000 110,000 376,000 64,000 250,000 314,000 Gross Profit Selling and Administrative Expenses: Variable 61,000 43,000 75,000 29,000 136,000 72,000 Fixed 104.000 104,000 208,000 Total Selling and Administrative Expenses Operating Income (Loss) $ (40,000) $ 146,000 $ 106,000 Print Done Members of the board are surprised that the industrial systems product line is not profitable. They commis administrative expenses by $14,000. Read the requirements. Requirement 1. Prepare a differential analysis to show whether Security One should drop the industrial sys II in operating income Totals with Industrial Systems Totals Without Industrial Systems Change Industrial Systems is Dropped Net Revenge Variable Costa Manufacturing Selling and Administrative Total Variable costs Contribution Margin bed Costs Manufacturing Selling and Administrative Total Fixed Costs Operating income (Loss)