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Members of the board of directors of Security Team have received the following operating income data for the year ended May 31, 2018: (Click the loon 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 S83,000 and decrease fixed selling and administrative expenses by $12,000. Read the requirements 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 profits.) 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 A Requirements 1. Prepare a differential analysis to show whether Security Team should drop the industrial systems product line. 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. 3. What have you learned from the comparison in Requirement 2? Print Done Members of the board of directors of Security Team have received the following operating income data for the year ended May 31, 2018: (Click the loon 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 S83,000 and decrease fixed selling and administrative expenses by $12,000. Read the requirements i Data Table Requirement 1. Prepare a differential analysis to show whether Security Team should drop the industrial systems product line. Expected decrease in revenues Expected decrease in total variable costs Expected decrease in fixed costs Expected decrease in total costs Security Team Income Statement For the Year Ended May 31, 2018 Product Line Household Systems Systems Total $ 300,000 $ 310.000 S 610,000 Expected decrease in operating income Industrial A Requirements Net Sales Revenue Cost of Goods Sold: Variable 34,000 230,000 43,000 62.000 77,000 292,000 Fixed 264,000 105,000 369,000 1. Prepare a differential analysis to show whether Security Team should drop the industrial systems product line. 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. 3. What have you learned from the comparison in Requirement 2? Total Cost of Goods Sold Gross Profit 36,000 205,000 241,000 Seling and Administrative Expenses: Variable 69,000 40,000 70,000 25,000 139,000 65,000 Print Done Fixed 109,000 95,000 204,000 Total Selling and Administrative Expenses

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