Question Help * & P25-23A (similar to) Members of the board of directors of Security Team have received the following operating income data for the year ended May 31, 2018 EE (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 $84,000 and decrease fxed selling and administrative expenses by $14,000. Read the tequiremens 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 profas.) (340,000) Expected decrease in revenues Expected decrease in total variable costs Expected decrease in fixed costs Expected decrease in total costs Expected decrease in operating income S 96,000 98,000 194,000 $ (146,000) 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 to 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, 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) Enter any number in the edit fields and then click Check Answer Clear All Check Answer f 12 pts 2 of 3 (3 complete) HW Score: 47.37%, 11.84 3A (similar to) Question H board of directors of Security Team have received the following operating income data for the year ended May 31, 2018 on to view the operating income data.) board are surprised that the industrial systems product line is not profitable. They commission a study to determine whether the company ompany accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $84,000 and decrease fixed selling xpenses by $14,000 Prepare a differential analysis to show whether Security Team should drop the industrial systems product line (Use parentheses or a min s to profits) crease in reverData Table crease in total crease in fixed crease in total rease in op Security Team Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Prepare cont ves: (a) with the in ment 1. (Use paren d (b) without an operating Total $ 340,000 $ 370,000 $ 710,000 Net Sales Revenue Cost of Goods Sold: Variable 46,000 79,000 66,000 306,000 273,00012.000 385,000 67,000 258,000 325,000 33,000 240,000 Fixed Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses nue ng Administrative osts argin 63,000 77,000 140.000 22,000 60,000 99,000 200,000 S (34,000) $ 159,000 $ 125,000 Variable 38,000 Fixed 101,000 Total Selling and Administrative Expenses Operating Income (Loss) ng Print Done ts me (Loss) er in the edit fields and then click Check Answer Check
