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. Requirement Data Table Company accountants estimate that discontinuing the industrial systems line will decrease fixed cost of goods sold by $81,000 an decrease fixed marketing and administrative expenses by $10,00 Read the requirements. - Xms product line- Contribution Less: Fixed d A 1 Operating ind 2 Requirement alternatives: 3 numbers to y 4 B C D Safety Systems Product Line Contribution Margin Income Statement For the Year Product lines etwo es' income Begin by prep showing the d 9 7 Sales revenue Industrial Household Systems Systems Company Total e statement $ 280,000 $ 320,000 $ 600,000 8 Less cost of goods sold: 9 Variable 10 Fixed 11 Gross profit 33,000 200,000 39,000 61,000 261,000 72,000 $ 47,000 $ 220,000 $ 267,000 Sales revenu 12 Less marketing and administrative expenses: Variable expe 13 Variable Cast of d 14 Fixed Choose from 15 Operating income (loss) Save for La 65,000 40,000 71,000 136,000 25,000 65,000 $ (58,000) $ 124,000 $ 66,000 Print Done 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 $81,000 and decrease fixed marketing and administrative expenses by $10,000. 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 Contribution margin lost if Industrial Systems is discontinued Less: Fixed cost savings if Industrial Systems is discontinued Operating income gained if Industrial Systems is discontinued Total 182000 91000 91000 Requirement 2. Prepar alternatives: (a) with the gained numbers to your answel lost income statements to show Safety Systems' total operating income under the two ine and (b) without the line. Compare the difference between the two alternatives' income What have you learned from this comparison? Begin by preparing the statements with and without the industrial systems line, then prepare the contribution margin income statement showing the decrease if the industrial systems line is discontinued. (Use parentheses or a minus sign for an operating loss.) Safety Systems Total Analysis of Discontinuing a Product Line Sales revenue Variable expenses: Cast of one old Totals With Industrial Systems Totals Without Industrial Systems Difference 600000 72000 Requirement 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? Begin by preparing the statements with and without the industrial systems line, then prepare the contribution margin income statement showing the decrease if the industrial systems line is discontinued. (Use parentheses or a minus sign for an operating loss.) Safety Systems Total Analysis of Discontinuing a Product Line Totals With Industrial Systems Totals Without Industrial Systems Difference 600000 Sales revenue Variable expenses: 72000 Cost of goods sold Marketing and administrative expense 267000 Total variable expenses 136000 Contribution margin Fixed expenses: Cost of goods sold Marketing and administrative expense Total fixed expenses Operating income (loss) What have you learned from this comparison? The operating income difference calculated on the total analysis of discontinuing a product line Choose from any list or enter any number in the input fields and then continue to the next question. the expected decrease in operating Sales revenue Safety Systems Total Analysis of Discontinuing a Product Line Totals With Industrial Systems Totals Without Industrial Systems Difference 600000 Variable expenses: Cost of goods sold 72000 Marketing and administrative expense 267000 Total variable expenses 136000 Contribution margin Fixed expenses: Cost of goods sold Marketing and administrative expense Total fixed expenses Operating income (loss) What have you learned from this comparison? The operating income difference calculated on the total analysis of discontinuing a product line income if Safety Systems discontinues the industrial systems product line, as shown in Require This demonstrates that the incremental analysis approach in Requirement 1 yields compares total operating income under the two alternatives. Choose from any list or enter any number in the input fields and then continue to the next question. Save for Later the expected decrease in operating does not equal equals roach in Requirement 2 that Members of the board of directors of Safety Systems have received the ollowing 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 system will decrease fixed cost of goods sold by $81,000 and decrease fixed marketing and administrative expenses by $10,000. Read the requirements. decrease if the industrial systems line is discontinued. (Use parentheses or a minus sign for an operating loss.) Safety Systems Total Analysis of Discontinuing a Product Line Sales revenue Totals With Industrial Systems Totals Without Industrial Systems Difference 600000 Variable expenses: Cost of goods sold 72000 Marketing and administrative expense 267000 Total variable expenses 136000 Contribution margin Fixed expenses: Cost of goods sold Marketing and administrative expense Total foxed expenses Operating income (loss) What have you learned from this comparison? The operating income difference calculated on the total analysis of discontinuing a product line income if Safety Systems discontinues the industrial systems product line, as shown in Requirement 1. This demonstrates that the incremental analysis approach in Requirement 1 yields compares total operating income under the two alternatives. Choose from any list or enter any number in the input fields and then continue Save for Later the expected decrease in operating results as the longer approach in Requirement 2 that different on the same 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. Operating income gained Company accountants estimate that discontinuing the industrial systems line will decrease fixed cost of goods sold by $81,000 and decrease fixed marketing and administrative expenses by $10,000. Read the requirements. if Industrial Systems is discontinued 91000 Requirement 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? Begin by preparing the stateme decrease if the industrial syster Requirements statement showing the X Total An Sales revenue Variable expenses: Cost of goods sold Marketing and administrativ Total variable expenses Contribution margin Fixed expenses: 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 leamed from this comparison? 136000 Print Done