Members of the board of directors of Security Aliance 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 $80,000 and decrease fixed administrative expenses by $11,000. Requirements 1. Prepare an incremental analysis to show whether Security Alliance should discontinue the industrial systems product line. 2. Prepare contribution margin income statements to show Security Alliance's total operating income under the two altematives: (a) with the industrial systems line and (b) without the line. Compare the alifference between the two marketing and administrative altematives' income numbers to your answer to Requirement 1. What have you learned from this companison? Requirement 1. Prepare an incremental analysis to show whether Security Alliance 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 Requirement 2. Prepare contribution margin income statements to show Security Alliance's total operating income under the two altematives: (a) with the industrial systems line and (b) without the line. Compare the difference between the two if Industrial Systems is discontinued -- altematives' 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.) Security Alliance Total Analysis of Discontinuing a Product Line