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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
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 $81,000 and decrease fixed selling and administrative expenses by S14,000 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 -X Data table Requirements 1. Control One Income Statement For the Year Ended May 31, 2018 , Product Line Industrial Household Systems Systems Total $ 310,000 $ 360,000 $ 670,000 Prepare a differential analysis to show whether Control One should drop the industrial systems product line 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. 3. What have you learned from the comparison in Requirement 27 Net Sales Revenue Print Done Cost of Goods Sold Variable 36,000 230.000 44,000 68,000 Fixed 80,000 298,000 378,000 266,000 112.000 44,000 248.000 292,000 Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses: Variable 65,000 76,000 28.000 141,000 69,000 Fixed 41,000 106,000 104,000 210,000 Total Selling and Administrative Expenses Operating Income (Loss) $ (62,000) $ 144,000 $ 82,000
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