Accouning Principles ll Garret Garcia&1 4/9/18 3:04 PM Homework: Chapter 25 Home

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Accouning Principles ll Garret Garcia&1 4/9/18 3:04 PM Homework: Chapter 25 Homework Score: 0 of 1 pt P25-23A (similar to) Save 2 of 3 (0 complete) HW Score: 0%, 0 of 3 pts Question Help Members of the board of directors of Security Team have received the following operating income data for the year ended May 31, 2018 EEB (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 $83,000 and decrease fixed selling and administrative expenses by $11,000 Read the requirements Requirement 1. Prepare a dfferential'analysis to show whether Security Team should drop the industrial systems product line. (Use pa enter decreases to profits) a minus sign to in operating income Choose from any list or enter any number in the input fields and then click Check Answer Clear All Check Answer remaining

Explanation / Answer

Incremental Analysis: Loss of sales revenue of Industrial System -310000 Savings in cost: Savings in Variable cpst 96000 Savings in Fixed cost 94000 Total Savings in cost of Industrila system 190000 Net decrease in operating cost -120000

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