- Members Of The Board Of Directors Of Control One Have Received The Following Operating Income Data For The Year Ended Ma 1 (94.79 KiB) Viewed 13 times
Members of the board of directors of Control One have received the following operating income data for the year ended May 31, 2024: (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 $84,000 and decrease fixed selling and administrative expenses by $14,000. Data table Net Sales Revenue. Cost of Goods Sold: Variable Fixed Total Cost of Goods Sold Gross Profit Control One Income
Statement For the Year Ended May 31, 2024 $ Product Line Industrial Systems Household Systems 330,000 $ 33,000 230,000 263,000 67,000 - X Total 360,000 $ 690,000 43,000 66,000 109,000 76,000 296,000 372,000 251,000 318,000 Requirements 1. 2. Prepare a differential analysis to show whether Control One should drop the industrial systems product line. Prepare contribution margin income statements to show Control One's total operating income under the two alternatives: (a) with the industrial systems line and (b) without the line. Compare the difference between the two alternatives' income numbers to your answer to Requirement 1. 3. What have you learned from the comparison in Requirement 2? Print Done
Data table Net Sales Revenue Cost of Goods Sold: Variable Fixed Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses: Variable Fixed Total Selling and Administrative Expenses Operating Income (Loss) $ 330,000 $ 33,000 230.000 263,000 67,000 69,000 40,000 109,000 (42,000) $ 360,000 $ 690,000 43,000 66,000 109,000 251,000 77,000 27,000 76,000 296,000 372,000 318,000 146,000 67,000 104,000 213,000 147,000 $ 105,000 Requirements 1. Prepare a differential analysis to show whether Control One should drop the industrial systems product line. 2. Prepare contribution margin income statements to show Control One's total operating income under the two alternatives: (a) with the industrial systems line and (b) without the line. Compare the difference between the two alternatives' income numbers to your answer to Requirement 1. 3. What have you learned from the comparison in Requirement 2? Print Done
Requirement 1. Prepare a differential analysis to show whether Control One should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.) in operating income