Members of the board of directors of Safety Point have received the following operating income data for the year ended May 31, 2016: (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 $82,000 and decrease fixed selling and administrative expenses by $11,000. Read the requirements Requirement 1. Prepare a differential analysis to show whether Safety Point should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.) Expected decrease in revenues $ (310,000) Expected decrease in total variable costs 102,000 Expected decrease in fixed costs 93,000 Expected decrease in total costs 195,000 Expected decrease in operating income $ (115,000) Requirement 2. Prepare contribution margin income statements to show Safety Point'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.) Enter any number in the edit fields and then click Check Answer Safety Point Contribution Margin Income Statement For the Year Ended May 31, 2016 Totals With Totals Without Industrial Systems Industrial Systems Change if Industrial Systems Is Dropped Sales Revenue Variable Costs: Cost of Goods Sold Selling and Administrative Expenses Total Variable Costs Contribution Margin Fixed Costs: Cost of Goods Sold Selling and Administrative Expenses Total Fixed Costs Operating Income (Loss) Enter any number in the edit fields and then click Check Answer. Data Table Safety Point Income Statement For the Year Ended May 31, 2016 Product Line Industrial Household Systems 310,000 $ Systems Total 370,000 $ 680,000 $ Sales Revenue Cost of Goods Sold: Variable 34,000 260,000 44,000 63,000 78,000 323,000 Fixed Total Cost of Goods Sold 294.000 107,000 401,000 Gross Profit 16.000 263,000 279,000 Selling and Administrative Expenses: Variable 68,000 41.000 72,000 22,000 140,000 63,000 Fixed Total Selling and Administrative Expenses 109,000 94,000 203,000 $ (93,000) $ 169,000 $ 76,000 Operating Income (Loss) Print Done Clear All May Requirements ms 1. Prepare a differential analysis to show whether Safety Point should drop the industrial systems product line. 2. Prepare contribution margin income statements to show Safety Point'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 2? Print Done