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Members of the board of directors of 123 Security have Company accountants estimate that discontinuing the received the following operating income data for the year just industrial systems line will decrease fixed cost of goods sold ended: by $79,000 and decrease fixed marketing and administrative (Click the icon to view the operating income data.) expenses by $8,000. Members of the board are surprised that the industrial systems Read the requirements. product line is losing money. They commission a study to determine whether the company should discontinue the line. Requirement 1. Prepare an incremental analysis to show whether 123 Security should discontinue the industrial systems product line. Total Incremental Analysis for Discontinuation Decision Contribution margin lost if Industrial Systems is discontinued Less: Fixed cost savings if Industrial Systems is discontinued Operating income it Industrial Systems is discontinued Totals With Industrial Systems Totals Without Industrial Systems Difference Sales revenue Variable expenses Cost of goods sold Marketing and administrative expense Total variable expenses Contribution margin Fixed expenses: Cost of goods sold Marketing and administrative expense Total food expenses Onerating income Close The deadlysis of die expedig Very This time Wein Herren 1 2 123 Security Product Line Contribution Margin Income Statement For the Year 3 4 6 Product lines Industrial Household Company Systems Systems Total $ 290,000 $ 390,000 $ 680,000 7 Sales revenue 8 Less cost of goods sold: 9 Variable 47,000 40,000 260,000 87,000 322,000 10 Fixed 62,000 $ (10,000) $ 281,000 $ 271.000 11 Gross profit 12 Less marketing and administrative expenses: 13 Variable 76,000 145,000 69,000 38.000 26,000 64,000 14 Fixed $ (117.000) $ 179,000 $ 62,000 15 Operating income (loss) Print Done

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