Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Members of the board of drectons of Secunty Atarms have received the foliowing operating income data for the yover onded May 31,2024 Members of the

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Members of the board of drectons of Secunty Atarms have received the foliowing operating income data for the yover onded May 31,2024 Members of the board are surpised that the industral systems product line is not profitable. They conmission a study to determine whether the company should drop the line. Read the requirinents Members of the board of directors of Secunty Alarms hive received the following operating income data for the year ended May 31 , 2024 EF (Click the ican fo viow the operaling ficome dati.) Members of the board are surprised that the industrial systems product line is not profitable. They commission a study to determine whether the compary Company accountants estimate that dropping industrial systems will decrease foxed cost of goods sold by $81,000 and docrease foxed selling and admin. 1. Prepare a differential analysis to show whether Security Alarms should drop the industrial systems product fine. 2. Prepare contribution margin income statements to show Security Alarm'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 to your answer to Requirement 1. 3. What have you learned from the comparison in Requirement 2 ? Security Alarms ticome Statement For the Year Ended May 31,2024 \begin{tabular}{|c|c|c|c|c|} \hline 1 & \multicolumn{2}{|c|}{ Systems } & Systems & \multirow{2}{*}{710,000Total} \\ \hline Net Sales Revenue & $ & 340,000$ & 370,000$ & \\ \hline \multicolumn{5}{|l|}{ Cost of Goods Sold: } \\ \hline Variable & & 35,000 & 49,000 & 84,000 \\ \hline Fixed & & 240,000 & 66,000 & 306,000 \\ \hline Total Cost of Goods Sold & & 275,000 & 115,000 & 390,000 \\ \hline Gross Profit & & 65,000 & 255,000 & 320,000 \\ \hline \multicolumn{5}{|l|}{ Selling and Administrative Expenses: } \\ \hline Variable & & 66,000 & 75,000 & 141,000 \\ \hline Fixed & & 40,000 & 21,000 & 61,000 \\ \hline Total Selling and Administrative Expenses & : & 106,000 & 96,000 & 202,000 \\ \hline Operating Income (Loss) & $ & (41,000)$ & 159,000$ & 118,000 \\ \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting in an Economic Context

Authors: Jamie Pratt

8th Edition

9781118139424, 9781118139431, 470635290, 1118139429, 1118139437, 978-0470635292

More Books

Students also viewed these Accounting questions

Question

=+Explain the key responsibilities of each social media role

Answered: 1 week ago