Question
members of the board of directors of security check have received the following operating income data for the year ended may 31, 2018. net sales
members of the board of directors of security check have received the following operating income data for the year ended may 31, 2018. net sales revenue , industrial systems 360,000 household systems 380,000 total 740,000. cost of goods sold: variable industrial systems 37,000 household systems 47,000 total 84,000. fixed industrial systems 260,000 household systems 63,000 total 323,000. total cost of goods sold industrial systems 297,000 household systems 110,000 total 407,000. gross profit industrial systems 63,000 houshold systems 270,000 total 330,000. selling and administrative expenses : variable industrial systems 64,000 household systems 73,000 total 137,000. fixed indusrial systems 44,000 household systems 26,000 total 70,000. total selling and administrative expenses industrial systems 108,000 household systems 99,000 total 207,000. operating income( loss) industrial systems (45,000) household systems 171,000 total 126,000. requirements 1. prepare a differential analysis to show whether security check should drop the industrial systems product line. 2. prepare contribution margin income statements to show security check's total operating income under the two alternatives: (a) with the the industrial line and (b) without the line. compare the difference between the two alternatives' income numbers to your answer to requirement 1. 3. what have you learned from the comparison in requirement 2?
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