Help please... also for 2b.) $(41,000) SECURITY CHECKIncome StatementFor the Year Ended May 31, 2024Product LineIndustrialHouseholdSystemsSystemsTotalNet Sales Revenue$ 360,000$ 380,000$ 740,000Cost of Goods Sold:Variable37,00047,00084,000Fixed260,00063,000323,000Total Cost of Goods Sold297,000110,000407,000Gross Profit63,000270,000333,000Selling and Administrative Expenses:Variable64,00073,000137,000Fixed44,00026,00070,000Total Selling and Administrative Expenses108,00099,000207,000Operating Income (Loss)S (45,000)$ 171,000$ 126,000 Members of the board are surprised that the industrial systems product line is not profit-able. They commission a study to determine whether the company should drop the line.Company accountants estimate that dropping industrial systems will decrease fixed cost ofgoods sold by $80,000 and decrease fixed selling and administrative expenses by $12,000.Requirements1. Prepare a differential analysis to show whether Security Check should drop theindustrial systems product line.2. Prepare contribution margin income statements to show Security Check's totaloperating income under the two alternatives: (a) with the industrial systems lineand (b) without the line. Compare the difference between the two alternatives'income numbers to your answer to Requirement 1.

Contribution margin income statement:Under this income statement, both the variable and fixed costs…

SECURITY CHECK Income Statement For the Year Ended May 31, 2024 Product Line Industrial Systems Household Systems Total Net Sales Revenue S 360,000 $ 380,000 $ 740,000 Cost of Goods Sold: Variable 37,000 47,000 84,000 Fixed 260,000 63,000 323,000 Total Cost of Goods Sold 297,000 110,000 407,000 Gross Profit 63,000 270,000 333,000 Selling and Administrative Expenses: Variable 64,000 73,000 137,000 Fixed 44,000 26,000 70,000 Total Selling and Administrative Expenses 108,000 99,000 207,000 Operating Income (Loss) S (45,000) $ 171,000 $ 126,000

SECURITY CHECK Income Statement For the Year Ended May 31, 2024 Product Line Industrial Systems Household Systems Total Net Sales Revenue S 360,000 $ 380,000 $ 740,000 Cost of Goods Sold: Variable 37,000 47,000 84,000 Fixed 260,000 63,000 323,000 Total Cost of Goods Sold 297,000 110,000 407,000 Gross Profit 63,000 270,000 333,000 Selling and Administrative Expenses: Variable 64,000 73,000 137,000 Fixed 44,000 26,000 70,000 Total Selling and Administrative Expenses 108,000 99,000 207,000 Operating Income (Loss) S (45,000) $ 171,000 $ 126,000

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.4.7P

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