Exercise 7-13 Marx sells computer equipment and home office furniture. Currently the furniture product line takes up approximately 50 percent of the companys retail floor space. The president of Marx is trying to decide whether the company should continue offering furniture or concentrate on computer equipment. Below is a product line income statement for the company. If furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of computer equipment can increase by 12 percent without affecting direct fixed costs. Allocated fixed costs are assigned based on relative sales.

	Computer Equipment	Home Office Furniture	Total
Sales	$1,430,000	$1,101,100	$2,531,100
Less cost of goods sold	$929,500	$800,800	$1,730,300
Contribution margin	$500,500	$300,300	$800,800
Less direct fixed costs:
Salaries	$180,180	$190,000	$370,180
Other	$60,060	$60,060	$120,120
Less allocated fixed costs:
Rent	$15,420	$10,280	$25,700
Insurance	$3,660	$2,440	$6,100
Cleaning	$4,320	$2,880	$7,200
Presidents salary	$78,000	$52,000	$130,000
Other	$6,720	$4,480	$11,200
Net income	$152,140	($21,840)	$130,300

In order to determine whether Marx should discontinue the furniture line and the financial benefit (cost) of dropping it, calculate the net income without Home Office Furniture.