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Challenge Exercise 7-2 (Part Level Submission) Safe and Secure, Inc. produces three models of home security systems. Information on the three products is given below:

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Challenge Exercise 7-2 (Part Level Submission) Safe and Secure, Inc. produces three models of home security systems. Information on the three products is given below: Sales Variable expenses Contribution margin Fixed expenses Net income Assurance Decoder Burglar Beware $453,000 $755,000 $294,100 226,500 302.000 205,870 226,500 453.000 88,230 177.800 339.900 140,000 548,700 $113,100 {51,770) Fixed expenses consist of $440,400 of common costs allocated to the three products based on relative sales, and additional fixed costs of $44,600 (Assurance), $120,000 (Decoder), and $52,700 (Burglar Beware). The common costs will be incurred regardless of how many models are produced. The other fixed expenses would be eliminated if a model is phased out. Matt Dillon, an executive with the company with extensive law enforcement background, feels that the Burglar Beware line should be discontinued to increase the company's net income. (b) (d) Assume instead that fixed expenses consist of $135,870 of common costs allocated to the three products equally, and additional fixed costs of $128,300 (Assurance), $295,100 (Decoder), and $98,430 (Burglar Beware). The common costs will be incurred regardless of how many models are produced. The other fixed expenses would be eliminated if a model is phased out. Compute net income by product line and in total for Safe and Secure, Inc., if the company discontinues Burglar Beware product line. Should Safe and Secure, Inc., eliminate the Burglar Beware product line? Why or why not? (Enter loss using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).) Assurance Decoder Company Total Net income when the Burglar the total net income for the company is Beware product line is excluded. Click if you would like to show Work for this question Open Show Work

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