Members of the board of directors of Security Team have received the following operating income data for the year ended May 31, 2024: (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 determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $84,000 and decrease fixed selling and administrative expenses by $11,000. Read the requirements. Requirement 1. Prepare a differential analysis to show whether Security Team should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.) in operating income Requirement 2. Prepare contribution margin income statements to show Security Team's total operating income under the two alternatives: (a) with the industrial systems line and (b) without the line. Compare the difference between the two alternatives' income numbers your answer to Requirement 1. (Use parentheses or a minus sign for an operating loss.) Security Team Contribution Margin Income Statement For the Year Ended May 31, 2024 Totals With Industrial Systems Totals Without Industrial Systems Change if Industrial Systems Is Dropped 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 3. What have you learned from the comparison in Requirement 2? The operating income difference calculated on the total analysis of dropping a product line This demonstrates that the differential analysis approach in Requirement 1 yields Data table Security Team Income Statement For the Year Ended May 31, 2024 Product Line Industrial Household Systems Systems Total 310,000 $ 320,000 $630,000 Net Sales Revenue S Cost of Goods Sold: Variable 33,000 250,000 43,000 76,000 65,000 315,000 Fixed Total Cost of Goods Sold 283,000 108,000 391,000 Gross Profit 27,000 212,000 239,000 Selling and Administrative Expenses: Variable 62,000 74,000 136,000 the expected decrease operating income Security Team drops the industrial systems product line, as shown in Requirement 1. 45,000 29,000 74,000 Fixed result as the longer approach in Requirement 2 that compares total operating income under the two alternatives. 107,000 Total Selling and Administrative Expenses Operating Income (Loss) S 210,000 (80,000) $ 109,000 $ 29,000 103,000 -55