Members of the board of directors of Security First have received the following operating income data for the year ended May 31, 2018: 3 (Click the icon to view the operating income data.) Members of the board are surprised that the industrial systems product line is not profitable. They commission a study to determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $80,000 and decrease fixed selling and administrative expenses by $10,000 Read the requirements For the Year Ended May 31, 2018 Totals With Totals Without Change if Industrial Systems Is Dropped Industrial Systems Industrial Systems Net Sales Revenue Variable Costs: Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs: Manufacturing Selling and Administrative Total Fixed Costs Operating Income (Loss) Requirement 1. Prepare a differential analysis to show whether Security First should drop the industrial systems product line. $ (340,000) $ Expected decrease in revenues Expected decrease in total variable costs Expected decrease in fixed costs Expected decrease in total costs 104,000 90,000 194,000 Expected decrease in operating income $ (146,000) i Data Table Security First Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total $ 340,000 $ 390,000 $ 730,000 Net Sales Revenue Cost of Goods Sold: Variable 35,000 250,000 49,000 62,000 84,000 312,000 Fixed Total Cost of Goods Sold 285,000 111,000 396,000 55,000 279,000 334,000 Gross Profit Selling and Administrative Expenses: Variable 69,000 43,000 72,000 28,000 141,000 71,000 Fixed Total Selling and Administrative Expenses 112,000 100,000 212,000 $ Onorating Income (Locs) (57,000) $ 179,000 $ 122,000