ism group project

ism group project - 220,000 115,000 105,000 Contribution...

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(20-25 min.) P 19-25A Req. 1 Security Force Incremental Analysis of Dropping a Product Line Expected decrease in revenues— Dropping industrial systems sales (\$320,000) Expected decrease in expenses: Variable expenses: Cost of goods sold \$38,000 Marketing and administrative expenses 67,000 Fixed expenses: Cost of goods sold 85,000 Marketing and administrative expenses 13,000 Expected decrease in total expenses 203,000 Expected decrease in operating income (\$117,000 ) Decision: Do not drop Industrial Systems.

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(continued) P 19-25A Req. 2 Security Force Total Analysis of Dropping a Product Line Totals With Industrial Systems Totals Without Industrial Systems Decrease if Industrial Systems Is Dropped Sales revenue \$660,000 \$340,000 \$320,000 Variable expenses: Cost of goods sold 83,000 45,000 38,000 Marketing and administrative expenses 137,000 70,000 67,000 Total variable expenses
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Unformatted text preview: 220,000 115,000 105,000 Contribution margin 440,000 225,000 215,000 Fixed expenses: Cost of goods sold 317,000 232,000 a 85,000 Marketing and administrative expenses 65,000 52,000 b 13,000 Total fixed expenses 382,000 284,000 98,000 Operating income (loss) \$ 58,000 \$ (59,000 ) \$117,000 __________ a \$317,000 \$85,000 − b \$ 65,000 \$13,000 − (continued) P 19-25A Req. 3 The operating income difference calculated in the total analysis of dropping a product line equals the expected decrease in operating income if Security Force drops the industrial systems product line, as shown in Req. 1. This demonstrates that the incremental analysis approach in Req. 1 yields the same result as the longer approach in Req. 2 that compares total operating income under the two alternatives....
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ism group project - 220,000 115,000 105,000 Contribution...

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