Members of the board of directors of Security Alarms have received the following operating income data for the year ended May $31,2024$: $($Click the icon to view the operating income data.$)$ estimate that dropping industrial systems will decrease fixed oost of goods sold by $$82,000$ and decrease fixed selling and administrative expenses by $$10,000.$

Read the requirements.

Data table

Requirement $1.$ Prepare a differential analysis to show whether Securlity Alarms shouid dico

in operating income

$\backslash$table$[[\backslash$table$[[$Security Alarms$],[$Income Statement$],[$For the Year Ended May $31,2024]]],[,$Product Line,Total$],[,\backslash$table$[[$Industrial$],[$Systems$]],\backslash$table$[[$Household$],[$Systems$]]],[$Net Sales Revenue,$$,340,000$$$,360,000$$$,700,000],[$Cost of Goods Sold:,,.,,$],[$Variable$,,35,000,43,000,78,000],[$Fixed$,,250,000,64,000,314,000],[$Total Cost of Goods Sold,,$285,000,107,000,392,000],[$Gross Profit,,$55,000,253,000,308,000],[$Selling and Administrative Expenses:$],[$Variable$,,61,000,71,000,132,000],[$Fixed$,,38,000,22,000,60,000],[$Total Selling and Administrative Expenses,,$99,000,93,000,192,000],[$$$,(44,000)$$$,160,000$$$,116,000]]$

Requirements

Prepare a differential analysis to show whether Security Alarms should drop the industrial systems product line.

Prepare contribution margin income statements to show Security Alarm'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 $1.$

What have you learned from the comparison in Requirement $2?$