Answer Happy

Members of the board of directors of Security One have received the following operating income data for the year just ended: (Click the icon to view the operating income data.) Members of the board are surprised that the industrial systems product line is losing money. They commission a study to determine whether the company should discontinue the line. Totals With Totals Without Industrial Systems Industrial Systems Sales revenue Variable expenses: Cost of goods sold Marketing and administrative expense Total variable expenses Cost of goods sold Marketing and administrative expense Total fixed expenses Operating income (loss) Contribution margin Fixed expenses: Save Company accountants estimate that discontinuing the industrial systems line will decrease fixed cost of goods sold by $82,000 and decrease fixed marketing and administrative expenses by $16,000. - X Data table A B 1 Security One 2 Product Line Contribution Margin Income Statement 3 For the Year 4 6 7 8 cost of goods sold: 9 Variable 10 Fixed 11 Gross profit $ 12 Less marketing and administrative expenses: 13 Variable 14 Fixed 15 Operating income (loss) $ Sales revenue Less D Product lines Industrial Household Company Systems Systems Total 310,000 $ 590,000 $ 280,000 $ 37,000 220,000 23,000 $ 39,000 76,000 60,000 280,000 211,000 $ 234,000 72,000 69,000 40,000 (86,000) $ 22,000 117,000 $ 141,000 62,000 31,000