Members of the board are surprised that the industrial systems product line is now profitable. They commission a study to determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fixed costs of good sold by $81,000 and decrease fixed selling and administrative expenses by $15,000.

Requirements - X Prepare a differential analysis to show whether Security First should drop the industrial systems product line. Prepare contribution margin income statements to show Security First'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 the comparison in Requirement 2? 1. 2. 3. Print Done Data Table -X Security First Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total 370,000 $ 720,000 Net Sales Revenue 350,000 $ Cost of Goods Sold: 35,000 42,000 77,000 Variable 250,000 65,000 315,000 Fixed 285,000 392,000 107,000 Total Cost of Goods Sold 65,000 263,000 328,000 Gross Profit Selling and Administrative Expenses: 77,000 146,000 69,000 Variable 67,000 27,000 40,000 Fixed 213,000 104.000 109,000 Total Selling and Administrative Expenses 159,000 $ 115,000 (44,000) S Operating Income (Loss) Done Print Data Table ns - X Security First Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total Net Sales Revenue $ 350,000 $ 370,000 $ 720,000 Cost of Goods Sold Variable 35,000 42,000 77,000 250,000 65,000 315,000 Fixed 285,000 107,000 392,000 Total Cost of Goods Sold Gross Profit 65,000 263,000 328,000 Selling and Administrative Expenses: 69,000 77,000 146,000 Variable 40,000 27,000 67,000 Fixed 213,000 104,000 109,000 Total Selling and Administrative Expenses 159,000 S 115,000 (44,000) S Operating Income (Loss) Print Done Requirements - X Prepare a differential analysis to show whether Security First should drop the industrial systems product line Prepare contribution margin income statements to show Security First's total operating income 1. 2. 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 the comparison in Requirement 2? 3. Print Done