Members of the board of directors of Safety Systems 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 discontinue the line. Company accountants estimate that discontinuing the industrial systems line will decrease fixed cost of goods sold by 579,000 and decrease fixed marketing and administrative expenses by $14,000. Read the requirements . Requirement 1. Prepare an incremental analysis to show whether Safety Systems should discontinue the industrial systems product line. Incremental Analysis for Discontinuation Decision Total Contribution margin lost if Industrial Systems is discontinued Less: Fixed cost savings if Industrial Systems is discontinued Operating income if Industrial Systems is discontinued Data table Requirements B D 1 Safety Systems Product Line Contribution Margin Income Statement 2 1. Prepare an incremental analysis to show whether Safety Systems should discontinue the industrial systems product line. 2. Prepare contribution margin income statements to show Safety Systems' 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. What have you learned from this comparison? 3 For the Year 4 6 Product lines Industrial Household Company Systems Systems Total $ 330,000 $ 390,000 $ 720,000 7 Sales revenue Print Done 8 Less cost of goods sold: 9 Variable 39,000 40,000 79,000 10 Fixed 270,000 62,000 332,000 $ 21,000 $ 288,000 $ 309,000 11 Gross profit 12 Less marketing and administrative expenses: 13 Variable 69,000 75,0001 144.000 14 Fixed 43,000 22.000 65,000 15 Operating income (loss) $ (91,000) 191,000 $ 100,000 Print Done