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Prepare the contribution margin income statements to show securities one’s total operating income under the two alternatives with the industrial systems, line and be without the line.

Prepare the contribution margin income statements to show securities one’s total operating income under the two alternatives with the industrial systems, line and be without the line.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Prepare the contribution margin income statements to show securities one’s total operating income under the two alternatives with the industrial systems, line and be without the line.
K Members of the board of directors of Security 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 $82,000 and decrease fixed selling and administrative expenses by $10,000. Net Sales Revenue Variable Costs: Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs: Manufacturing Selling and Administrative Total Fixed Costs Operating Income (Loss) Contribution Margin Income Statement For the Year Ended May 31, 2024 Totals With Industrial Systems 630,000 $ $ 77,000 136,000 213,000 417,000 299,000 61,000 360,000 57,000 Totals Without Industrial Systems 320000 34000 65000 99000 221000 Change if Industrial Systems Is Dropped
Transcribed Image Text:K Members of the board of directors of Security 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 $82,000 and decrease fixed selling and administrative expenses by $10,000. Net Sales Revenue Variable Costs: Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs: Manufacturing Selling and Administrative Total Fixed Costs Operating Income (Loss) Contribution Margin Income Statement For the Year Ended May 31, 2024 Totals With Industrial Systems 630,000 $ $ 77,000 136,000 213,000 417,000 299,000 61,000 360,000 57,000 Totals Without Industrial Systems 320000 34000 65000 99000 221000 Change if Industrial Systems Is Dropped
m sts gin 9 dm S ne ( Net Sales Revenue Cost of Goods Sold: Variable Income Statement For the Year Ended May 31, 2024 Fixed Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses: Variable Fixed Total Selling and Administrative Expenses Operating Income (Loss) Print $ Product Line Industrial Systems $ Total 310,000 $ 320,000 $630,000 34,000 230,000 264,000 46,000 Household Systems 65,000 40,000 105,000 (59,000) $ Done 43,000 77,000 69,000 299,000 112,000 376,000 208,000 254,000 71,000 136,000 21,000 61,000 92,000 197,000 116,000 $ 57,000
Transcribed Image Text:m sts gin 9 dm S ne ( Net Sales Revenue Cost of Goods Sold: Variable Income Statement For the Year Ended May 31, 2024 Fixed Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses: Variable Fixed Total Selling and Administrative Expenses Operating Income (Loss) Print $ Product Line Industrial Systems $ Total 310,000 $ 320,000 $630,000 34,000 230,000 264,000 46,000 Household Systems 65,000 40,000 105,000 (59,000) $ Done 43,000 77,000 69,000 299,000 112,000 376,000 208,000 254,000 71,000 136,000 21,000 61,000 92,000 197,000 116,000 $ 57,000
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