Requirement 1. Prepare an incremental analysis to show whether Security First should discontinue the industrial systems product line. Incremental Analysis for Discontinuation Decision Total Contribution margin lost if Industrial Systems is discontinued Less: Fixed cost savings if Industrial Systems is discontinued Operating income if Industrial Systems is discontinued A B 1 Security First 2 Product Line Contribution Margin Income Statement 3 For the Year 4 Product lines Industrial Household Systems Systems Company Total 6 7 Sales revenue $ 300,000 $ 360,000 $ 660,000 8 Less cost of goods sold: 9 Variable 35,000 46,000 81,000 10 Fixed 260,000 62,000 322,000 11 Gross profit 5,000 $ 252,000 $ 257,000 12 Less marketing and administrative expenses: 13 Variable 66,000 73,000 139,000 14 Fixed 40,000 26,000 66,000 15 Operating income (loss) $ (101,000) $ 153,000 $ 52,000