Members of the board of directors of Security Check 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 580 000 and decrease d selling and administrative expenses by $12000 Read the requirements Requirement 1. Prepare a differential analysis to show whether Security Check should drop the industrial systems product Inc. (Use parentheses or a minus sign to enter decreases to profits Expected decrease in revenue 5 (360.000) Expected decrease in variable costs s 101 000 Expected decrease in fixed costs 52000 Expected decrease in total costs 193 000 Expected decrease in operating income Requirement 2. Prepare contribution margin income statements to show Security Check's total operating income under the two alamatives: (a) with the industrial systems line and (h) without the line Compare the difference between the two alternatives'income numbers to your answer to Requirement1 or a minus sign for an operating loss.) Security Check Contribution Margin Income Statement For the Year Ended May 31, 2018 Totals With Totals Without Change it Industrial Industrial Systems Industrial Systems Systems Is Dropped Net Sales Revenue Variable Costs. Manufacturing Seling and Administrative Total Variable Costs Contribution Margin Fixed Costs: Manufacturing Selling and Administrative Total Fixed Costs Operating Income (Loss) i Data Table Security Check Income Statement For the Year Ended May 31, 2018 Product Line Industrial Household Systems Systems Total $ 360,000 $ 380,000 $ 740,000 Net Sales Revenue Cost of Goods Sold: Variable Fixed 37,000 260,000 297,000 47,000 63,000 110,000 84.000 323,000 407,000 333,000 63,000 270,000 Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses: Variable Fixed 64,000 44,000 108,000 (45,000) $ 73,000 137,000 26,000 70,000 99,000 207,000 171,000 $ 126,000 Total Selling and Administrative Expenses $ Operating Income (Loss) Print Print Done

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