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P25-23A (similar to) Question Help o Members of the board of directors of Safety Point have received the following operating income data for the year ended May 31, 2018: E: (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 $81,000 and decrease fixed selling and administrative expenses by $15,000. Read the requirements. Requirement 1. Prepare a differential analysis to show whether Safety Point should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.) in operating income Choose from any list or enter any number in the input fields and then click Check Answer. Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total Net Sales Revenue $ 340,000 $ 360,000 $ 700,000 Cost of Goods Sold: Variable 36,000 230,000 44,000 69,000 80,000 299,000 Fixed Total Cost of Goods Sold 266,000 113,000 379,000 Gross Profit 74.000 247.000 321.000 Cost of Goods Sold: Variable 36,000 230,000 44,000 69,000 80,000 299,000 Fixed Total Cost of Goods Sold 266,000 113,000 379,000 Gross Profit 74,000 247,000 321,000 Selling and Administrative Expenses: Variable 65,000 40,000 71,000 27,000 136,000 67,000 Fixed Total Selling and Administrative Expenses 105,000 98,000 203,000 $ (31,000) $ 149,000 $ 118,000 Operating Income (Loss) 1. Prepare a differential analysis to show whether Safety Point should drop the industrial systems product line. 2. Prepare contribution margin income statements to show Safety Point'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