Members of the board of directors of Security First have received the following operating income data for the year Company accountants estimate that discontinuing the industrial systems line will decrease fixed cost of goods sold just ended by $82,000 and decrease flowed marketing and administrative expenses by $9.000 Click the icon to view the operating income data) Read the mairements 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 1. Prepare an incremental analysis to show whether Security First should discontinue the Industrial systems product ine. Incremental Analysis for Discontinuation Decision Total Contribution margin lost if Industrial Systems is discontinued Less Fixed cost savings i Industrial Systems is discontinued Operating income Industrial Systems is discontinued Requirement 2. Prepare contribution margin income statements to show Security First's total operating income under the two alternatives: (a) with the industrial systems in 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 in the prepare the contribution margin income statement showing the decrease if the industrial systems line is discontinued. (Use parentheses or a minus sig for an operating os.) Security First Total Analysis of Discontinuing a Product Line Totals With Totals Without Question Help Members of the board of directors of Security First 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. Total Analysis of Discontinuing a Product Line Company accountants estimate that discontinuing the industrial systems line will decrease foxed cost of goods sold by $82,000 and decrease fond marketing and administrative expenses by $9,000 Read the requirements Totals With Totals Without Industrial Systems Industrial Systems Difference Sales revenue Variable expenses Cost of goods sold Marketing and administrative expense Total variable expenses Contribution margin Fed expenses Cost of goods sold Marketing and administrative expense Members of the board of directors of Security First have received the following operating income data for the year stended: (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 tudy to determine whether the company should discontinue the line Company accountants estimate that discontinuing the industrial systems line will decrease fixed cost of goods s by $82,000 and decrease fixed marketing and administrative expenses by $9.000 Read the requirements Marketing and administrative expense Total variable expenses Contribution margin ed expenses Cost of goods sold Marketing and administrative expense Total fixed expenses Operating income (s) What have you learned from this comparison? The operating income doronce calculated on the total analysis of discontinuing a product inn the expected decreto in operating noone Il security First discontinues the numral systems production show Requirement his demonstrates that the incremental analysis approach in Requirement 1 yleis results as the longer approach in Requirement that compares total operating income under the two atomatives i Data Table X Security First Product Line Contribution Margin Income Statement For the Year Product lines Industrial Household Company Systems Systems Total Sales revenue $ 290,000 $ 370,000 $ 660,000 Less cost of goods sold: Variable 34,000 46,000 80,000 Fixed 250,000 68,000 318,000 Gross profit $ 6,000 $ 256,000 $ 262,000 Less marketing and administrative expenses: Variable 65,000 72,000 137,000 Fixed 38,000 27,000 65,000 Operating income (loss) $ (97,000) $ 157,000 $ 60,000 Print Done