Safe Zone Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total Net Sales Revenue $ 300,000 $ 320,000 $ 620,000 Cost of Goods Sold: Variable 33,000 240,000 273,000 49,000 82,000 64,000 304,000 113,000 386,000 27,000 207,000 234,000 Fixed Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses: Variable 74,000136,000 21,000 59,000 95,000 195,000 $ 73,000) $ 112,000 $ 39,000 62,000 38,000 100,000 Fixed Total Selling and Administrative Expenses Operating Income (Loss) Requirement 1. Prepare a differential analysis to show whether Safe Zone should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.) $(300,000) 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 $ 95,000 95,000 190,000 (110,000) Requirement 2. Prepare contribution margin income statements to show Safe Zone'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.) Safe Zone 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)