Members of the board of directors of Security One have ving operating income data for the year just ended Company accountants estimate that discontinuing the industrial systems line will decrease fixed cost of goods sold by $77,000 (Click the icon to view the operating income data ) and decrease fixed marketing and administrative expenses by $17,000. Members of the board are surprised that the industrial systems product line is losing money. They commission a study to Read the requirements determine whether the company should discontinue the line. X Requirement 1. Prepare an incremental analysis to show whether Security One should discontinue the industrial systems product line Data Table ental Analysis for Discontinuation Decision Total Contribution margin lost f Less Fixed cost savings if Industrial Systems is discontinued Security One if Industrial Systems is discontinued Product Line Contribution Margin Income Statement For the Year Requirement 2. Prepare contribution margin income statements to show Security One's total operating income under the two alternatives. (a) with the income numbers to your answer to Requi Product lines ndustrial Household Company Begin by preparing the s dustrial systems line, then prepare the contribution m owing the dec Systems Systems Total 7 Sales revenue Requirements X 370 000 $ 380 000 5 750 000 B Less cost of goods sold 9 Variable 37 000 46 000 83,000 1. Prepare an incremental analysis to show whether Security One should discontinue the 10 Fixed 260 000 0 321,000 industrial systems product line 11 Gross profit 73 000 5 273,000 5 348,000 Sales 2. Prepare contribution margin income statements to show Security One's total operating Less marketing and administrative ling Compare the difference betweenustrial systems line and (b) without the income numbers to your 12 expanses have you learned from this comparison? 13 Variable 67 000 71.000 138 000 Choose 14 Fixed 36 000 27 000 63 000 15 Operating income (loss) (30 000) 9 175,000 S 145 000 18 - Type here to search