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Members of the board of directors of Safe Zone have received the following operating income data for the year ended May 31, 2018 (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 fixed selling and administrative expenses by $15,000. Re 0 Requirements uct line. (Use 4 Re 1. Prepare a differential analysis to show whether Safe Zone should drop the industrial systems product line 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. 3. What have you learned from the comparison in Requirement 2? een til close tly th Print Done Uld nd Fn the eid the con Safe Zone Income Statement ys quired at 1 or For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total $ 350,000 $ 370,000 $ 720,000 ded Net Sales Revenue ded Cost of Goods Sold. ded Variable 34,000 250,000 80,000 312.000 ded 46,000 62,000 108,000 Fixed ded Total Cost of Goods Sold 284.000 392,000 66,000 262,000 328,000 Gross Profit Selling and Administrative Expenses Variable Fixed Total Selling and Administrative Expenses Operating Income (Loss) 65,000 41.000 172,000 29,000 137,000 70.000 106,000 101,000 207.000 (40,000) $ 161,000 $ 121,000 Print Done goods sold by $84,000 and decrease fixed selling and administrative expenses by $15,000 Read the requirements $ 4. 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) Expected decrease in revenues $ (350,000) Expected decrease in total variable costs 99,000 Expected decrease in fixed costs 99,000 Expected decrease in total costs 198,000 $ (152.000) th Expected decrease in operating income sed nd Enter any number in Tields and then click Check Answer nart Clear All Final Check Safe Zone Contribution Margin Income Statement For the Year Ended May 31, 2018 Totals With Totals Without Industrial Systems Industrial Systems Change if Industrial Systems Is Dropped $ 350,000 Net Sales Revenue Variable Costs Manufacturing Selling and Administrative 80.000 46,000 34,000 65.000 Total Variable Costs 251,000 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 1 part Clear All Final