Members of the board of directors of Safety Step 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 $82,000 and decrease fixed selling and administrative expenses by $15,000. Safety Step Income Statement For the Year Ended May 31, 2018 Product Line Industrial Systems Household Systems Total Net Sales Revenue $ 300,000 $ 360,000 $ 660,000 Cost of Goods Sold: Variable 33,000 46,000 240,000 69,000 79,000 309,000 Fixed Total Cost of Goods Sold 273,000 115,000 388,000 Gross Profit 27,000 245,000 272,000 Selling and Administrative Expenses: Variable 138,000 63,000 41,000 75,000 24,000 Fixed 65,000 Total Selling and Administrative Expenses 104,000 99,000 203,000 $ Operating Income (Loss) (77,000) $ 146,000 $ 69,000 Requirement 1. Prepare a differential analysis to show whether Safety Step 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 Step'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 Step Contribution Margin Income Statement For the Year Ended May 31, 2018 Totals With Totals Without Change if Industrial Systems Is Industrial Systems Industrial Systems 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 Step 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