Homework: Chapter 25 Homework Save 2 of 3 (2 complete) Score: 0.15 of 1 pt x P25-23A (similar to) HW Score: 32.91%, 0.99 of 3 pts A Question Help o 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 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 581,000 and decrease fixed selling and administrative expenses by $11,000. Read the requirements, Data Table Requirement 1. Prepare a differential analysis to show whether Security Team should drop the industrial sy Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total 310,000 $ 320,000 S 630,000 In operating income $ Requirements Net Sales Revenue Cost of Goods Sold: Variable 35,000 240,000 43,000 62,000 78,000 302,000 Fixed 275,000 105,000 380,000 35,000 215,000 250,000 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 Selling and Administrative Expenses: Variable 142,000 68,000 39,000 74,000 28,000 Fixed 67,000 Print 102,000 Done 107,000 209,000 Total Selling and Administrative Expenses Operating Income (Loss) $ (72,000) $ 113,000 $ 41,000