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Members of the board of directors of Adobe Security have received the following operating income data for the year just ended: (Click the icon to view the operating Income data.) Members of the board are surprised that the industrial systems product line is losing money. 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 decreare fixed marketing and administrative expenses by $9,000. Requirements 1. Prepare an incremental analysis to show whether Adobe Security should drop the industrial systems product line. 2. Prepare contribution margin income statements to show Adobe Security'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. What have you learned from this comparison? Requirement 1. Prepare an incremental analysis to show whether Adobe Security should drop the industrial systems pra More Info Product Line Industrial Household Adobe Security Incremental Analysis of Dropping a Product Line Expected decrease in revenues Dropping industrial systems sales Expected decrease in expenses Vanable expenses Cost of goods sold Marketing and administrative expenses Fixed expenses Cost of goods sold Marketing and administrative expenses Systems Systems Tatai $ 390,000 $ 400.000 5 790.000 Sales revenue Cost of goods sold Variable 41.000 $ 280.000 Fored 48.000 $ 89,000 89.000 329,000 301.000 117.000 418.000 Expected decrease in total expenses Total cost of goods sold Gross profit Marketing and administrative expenses Vanatie 89.000 283.000 372.000 Expected decrease in operating income Requirement 2. Prepare contribution margin income statements to show Adobe Security's total operating income under alternatives'income numbers to your answer to Requirement 1 What have you learned from this comparison? 68.000 45.000 Fuad 78,000 27.000 144,000 72.000 Total mating and a between the two Enter any number in the edit fields and then continue to the next question 1000 105,000 210,000 Operating comes 178,000 150,000

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