Members of the board of directors of

Adobe Security

have received the following operating income data for the year just ended:

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(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 fixed cost of goods sold by

$85,000

and decrease fixed marketing and administrative expenses by

$9,000.

Read the requirements

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.

Requirement 1. Prepare an incremental analysis to show whether

Adobe Security

should discontinue the industrial systems product line.

Incremental Analysis for Discontinuation Decision			Total
Contribution margin lost if Industrial Systems is discontinued
Less: Fixed cost savings if Industrial Systems is discontinued
Operating income		if Industrial Systems is discontinued

Requirement 2. Prepare contribution margin income statements to show

Adobe Security'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 this comparison?

Begin by preparing the statements with and without the industrial systems line, then prepare the contribution margin income statement showing the decrease if the industrial systems line is discontinued. (Use parentheses or a minus sign for an operating loss.)

Adobe Security
Total Analysis of Discontinuing a Product Line
	Totals With	Totals Without
	Industrial Systems	Industrial Systems
Sales revenue
Variable expenses:
Cost of goods sold
Marketing and administrative expense
Total variable expenses

A B. D Adobe Security Product Line Contribution Margin Income Statement For the Year Product lines Industrial Household Company Systems Systems Total $ 340,000 $ 390,000 $ 730,000 3 7 Sales revenue 8 Less cost of goods sold: 9 Variable 10 Fixed 35,000 260,000 45,000 $ 46,000 81,000 67,000 327,000 277,000 S 322,000 $ 11 Gross profit 12 Less marketing and administrative expenses: 13 Variable 68,000 Fixed 63,000 44,000 (62,000) $ 14 25.000 131,000 69,000 122,000 $ 184.000 $ 15 Operating income (loss) Print Done Members of the board of directors of Adobe Security 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 fixed cost of goods sold by $85,000 and decrease fixed marketing and administrative expenses by $9,000. Read the requirements. Requirement 1. Prepare an incremental analysis to show whether Adobe Security should discontinue the industrial systems product line. Incremental Analysis for Discontinuation Decision Total Contribution margin lost if Industrial Systems is discontinued Less: Fixed cost savings if Industrial Systems is discontinued Operating income if Industrial Systems is discontinued Requirement 2. Prepare contribution margin income statements to how Adobe Security's total operating income under the water with the indos in and without the line and how some income numbers in your auto Regiment 1 What have you and from the companion Begin by preparing the woments with and without the mine, the prepare the conting comment showing the date Opening Hous Actie Security Total Analysis of honoring Product Line Total With Industriale Totale Without Industrial System Die Valge Cost of good Mariting and te Totals With Industrial Systems Totals Without Industrial Systems Difference Sales revenue Variable expenses: Cost of goods sold Marketing and administrative expense Total variable expenses Contribution margin Fixed expenses: Cost of goods sold Marketing and administrative expense Total fixed expenses Operating income (loss) What have you learned from this comparison? What have you come from this comparison? The person income rece coded on the list discontinuing pool the precedenti Requirement This demonstration och Prachino.com does