Exercise 7-13 Runner sells computer equipment and home office furniture. Currently the furniture product line takes up approximately 50 percent of the company's retail floor space. The president of Runner 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 14 percent without affecting direct fixed costs. Allocated fixed costs are assigned based on relative sales. Computer Home Office Equipment Furniture Total Sales Less cost of goods sold Contribution margin Less direct fixed costs: Salaries Other Less allocated fixed costs: $1,400,000 1,078,000 $2,478,000 784,000 1,694,000 784,000 910,000 490,000 294,000 171,500 53,900 171,500 53,900 343,000 107,800 10,734 2,567 3,239 Rent Insurance Cleaning President's salary Other Net income (loss) 14,020 3,160 4,120 70,540 7,170 $165,590 24,754 5,727 7,359 55,692 126,232 12,123 $(8,585) S157,005 4,953 Determine whether Runner should discontinue the furniture line and the financial benefit (cost) of dropping it. Net income without Home Office Furniture is s The company the Home Office Furniture product line