Data TableNet Sales Revenue300,000 $330,000 $ 630,000Cost of Goods Sold:Variable34,00048,00082,000Fixed250,00062,000312,000284,000110,000394,000Total Cost of Goods SoldGross Profit16,000220,000236,000Selling and Administrative Expenses:Variable69,00077,000146,00043,00028,00071,000Fixed112,000105,000217,000Total Selling and Administrative Expenses2$(96,000) $115,000 $ 19,000Operating Income (Loss)%24 Members of the board of directors of Safety Place have received the following operating income data for the year ended May 31, 2018:(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 thatdropping industrial systems will decrease fixed cost of goods sold by $80,000 and decrease fixed selling and administrative expenses by $10,000.Read the requirements.Requirement 1. Prepare a differential analysis to show whether Safety Place should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.)in operating income

Answered: Requirement 1. Prepare a differential…

Requirement 1. Prepare a differential analysis to show whether Safety Place should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.)

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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Question

Data Table
Net Sales Revenue
300,000 $
330,000 $ 630,000
Cost of Goods Sold:
Variable
34,000
48,000
82,000
Fixed
250,000
62,000
312,000
284,000
110,000
394,000
Total Cost of Goods Sold
Gross Profit
16,000
220,000
236,000
Selling and Administrative Expenses:
Variable
69,000
77,000
146,000
43,000
28,000
71,000
Fixed
112,000
105,000
217,000
Total Selling and Administrative Expenses
2$
(96,000) $
115,000 $ 19,000
Operating Income (Loss)
%24

Members of the board of directors of Safety Place have received the following operating income data for the year ended May 31, 2018:
(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 $80,000 and decrease fixed selling and administrative expenses by $10,000.
Read the requirements.
Requirement 1. Prepare a differential analysis to show whether Safety Place should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.)
in operating income

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