Members of the board of directors of Control One 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 $80,000 and decrease fixed selling and administrative expenses by $15,000. Read the requirements. Requirement 1. Prepare a differential analysis to show whether Control One should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.) in operating income Requirement 2. Prepare contribution margin income statements to show Control 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. (Use parentheses or a minus sign for an operating loss.) Control One Contribution Margin Income Statement For the Year Ended May 31, 2018 Totals With Totals Without Change if Industrial Industrial Systems Industrial Systems Systems Is Dropped Net Sales Revenue Variable Costs: Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs: Manufacturing Selling and Administrative Total Fixed Costs Operating Income (Loss) Requirement 3. What have you learned from the comparison in Requirement 2? The operating income difference calculated on the total analysis of dropping a product line V the expected decrease in operating income if Control One drops the industrial systems product line, as shown in Requirement 1. This demonstrates that the differential analysis approach in Requirement 1 yields result as the longer approach in Requirement 2 that compares total operating income under the two alternatives. Control One Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total $ 300,000 $ 320,000 $ 620,000 Net Sales Revenue Cost of Goods Sold: Variable 34,000 220,000 44,000 65,000 78,000 285,000 Fixed Total Cost of Goods Sold 254,000 109,000 363,000 Gross Profit 46,000 211,000 257,000 Selling and Administrative Expenses: Selling and Administrative Expenses: Variable 61,000 38,000 75,000 27,000 136,000 65,000 Fixed Total Selling and Administrative Expenses 99,000 102,000 201,000 $ (53,000) $ 109,000 $ 56,000 Operating Income (Loss)