Members of the board of directors of Safety First 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 drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $80,000 and decrease fixed marketing and administrative expenses by $10,000 Requirements 1 Prepare an incremental analysis to show whether Safety First should drop the industrial systems product line 2. Prepare contribution margin income statements to show Safety First's total operating income under the two 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? Requirement 1. Prepare an incremental analysis to show whether Safety First should drop the industrial systems product line More Info Safety First Incremental Analysis of Dropping a Product Line Product Line Expected decrease in revenues Dropping industrial systems sales Expected decrease in expenses Industrial Household Systems Systems Total $ 320,000 $ 390,000 $ 710 000 Sales revenue Variable expenses Cost of goods sold Cost of goods sold Variable $ Marketing and administrative expenses 38,000 $ 280,000 48,000 $ 86,000 70,000 350,000 Fixed Fixed expenses Cost of goods sold 318,000 118,000 436.000 Total cost of goods sold Gross profit Marketing and administrative expenses 2,000 272,000 274,000 Marketing and administrative expenses Expected decrease in total expenses Variable 137,000 63,000 39,000 74,000 29,000 Expected decrease in operating income Fixed 68 000 Total marketing and administrative expenses Enter any number in the edit fields and then continue to the next question. 102,000 103,000 205 000 $ (100,000) $ 169,000 $ 69,000 Operating income (loss) Members of the board of directors of Safety First 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 drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $80,000 and decrease fixed marketing and administrative expenses by $10,000 Requirements 1 Prepare an incremental analysis to show whether Safety First should drop the industrial systems product line 2. Prepare contribution margin income statements to show Safety First's total operating income under the two 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? Requirement 1. Prepare an incremental analysis to show whether Safety First should drop the industrial systems product line More Info Safety First Incremental Analysis of Dropping a Product Line Product Line Expected decrease in revenues Dropping industrial systems sales Expected decrease in expenses Industrial Household Systems Systems Total $ 320,000 $ 390,000 $ 710 000 Sales revenue Variable expenses Cost of goods sold Cost of goods sold Variable $ Marketing and administrative expenses 38,000 $ 280,000 48,000 $ 86,000 70,000 350,000 Fixed Fixed expenses Cost of goods sold 318,000 118,000 436.000 Total cost of goods sold Gross profit Marketing and administrative expenses 2,000 272,000 274,000 Marketing and administrative expenses Expected decrease in total expenses Variable 137,000 63,000 39,000 74,000 29,000 Expected decrease in operating income Fixed 68 000 Total marketing and administrative expenses Enter any number in the edit fields and then continue to the next question. 102,000 103,000 205 000 $ (100,000) $ 169,000 $ 69,000 Operating income (loss)