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Requirement 1. Prepare an incremental analysis to show whether Safey Systems should discontinue the industrial systems product ine. Requirement 2. Prepare contribution margin inoome statements
Requirement 1. Prepare an incremental analysis to show whether Safey Systems should discontinue the industrial systems product ine. Requirement 2. Prepare contribution margin inoome statements to show Satety Systems' total operating income under the two altechabves: (a) whth the industrial systems line and (o) Without the line. Compare the dithorence between the two allematives' income numbers to your answer to Requirement 1 . What have you leamed from this comparison? Begin by preparing the statements with and without the industrial systems ane, then prepare the contribution margin income staternent showing the decrease if the industriak systams line is discontinued. (Use parentheses or a minus sign for an operating loss) nate that $84,000 Data table Requirements 1. Prepare an incremental analysis to show whether Safety Systems should discontinue the industrial systems product line. 2. Prepare contribution margin income statements to show Safety Systems' 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 . What have you leamed from this comparison? Members of the board of directors of Safefy Systams have roceived the following operating Compary accountants exsmale that disconinuing the industhal systems lre wil decrease income data for the yeor just ended: foed cost of goods sold by $34,000 and decrease fixed marketing and administrabe (Click the ioon to vew the cperating income data.) Members of the board are surprised that the industrial systems product line is losing money. They commission a study to delermine whether the compacy should discontinue the line. Requirement 1. Prepare an incremental analysis to show whether Safety Systems should discontinue the industrial systems product line. Requirement 2. Propare contribution marg in income statoments to show Safoty Systems' total operating income under the two alilomatives. (a) with the industrial systems line and (b) without the lire Compare the diference between the two alternatives' income numbers to your answer to Requirement 1. What have you learned from this comparison? Begin by proparing the stotements with and without the industriat tystems Ine, then propare the contribution margin income statement showing the decte i if if the industral systems tine is discontinued. (Use parentheses or a minus sign for an eperaling loss.) Requirement 2. Prepare contrbution margin income statements to show Safety Systems' total operating income under the two abematives: (a) with the industrial syatems ine and (b) without the line. Compare the diference between the two aldernatives' income numbers to your answer to Reguirement 1. What have you learned fram this comparison? Begin by preparing the statements wth and without the industial systems line, then prepare the contritution margin income tatement showing the decrease it the industrial systems ine is discontinued. (Use parentheses of a minus sgn for an operating loss.) Members of the board of directors of Safety Systems have recelved the folowing operating Company accountants estimate that discontinuing the industial syslems line wil decreaso income data for the year just ended: fired cost of goods sold by 584,000 and decrease faed marketing and administratve (Cick the icon to view the operatrig income data.) expenses by $8,000. Members of the board are surprised that the industral systems product line is losing money. They commission a study to determine whether the company should dacontinue the ine. What have you leamed from this comparison? The operating income ofference calculated on the total analysis of discontinuing a product lre the expected decrease in operating income if Safey Systems discontinues the industrial systems product line, as shown in Requiromend 1. This demonstrates that the ineremental analysis approach in fequirement 1 ylolds results as the longer approach in-Requirement 2 that compares total operating income under the fwo alternatives
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