Members of the board of directors of Safety Point have received the following operating income data for the year ended May 31, 2018: 3: Click the icon to view the operating income data.) Members of the board are surprised that the industrial systems product line is 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 $14,000. 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.) in operating income 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.) Safety Point Contribution Margin Income Statement For the Year Ended May 31, 2018 Totals With Totals Without Industrial Systems Industrial Systems Change if Industrial 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 the expected decrease in operating income if Safety Point drops the industrial systems product line, as shown in Requirement 1. This demonstrates that the differential analysis approach in Requirement 1 yields V result as the longer approach in Requirement 2 that compares total operating income under the two alternatives. A Data Table - X Safety Point Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total 340,000 $ 360,000 $ 700,000 Net Sales Revenue Cost of Goods Sold: Variable 34,000 240,000 42,000 68,000 76,000 308,000 274,000 110,000 384,000 66,000 250,000 316,000 Fixed Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses: Variable Fixed Total Selling and Administrative Expenses Operating Income (Loss) 68,000 43,000 77,000 27,000 145,000 70,000 111,000 104,000 215,000 146,000 $ 101,000 $ (45,000) $ Print Done