Safe and Secure, Inc. produces three models of home security systems. Information on the three products is given below: Assurance Decoder Burglar Beware Sales $441,000 $735,000 $301,900 Variable expenses 220,500 294,000 211,330 Contribution margin 220,500 441,000 90,570 Fixed expenses 178,900 344,900 143,300 Net income $41,600 $96,100 $(52,730 ) Fixed expenses consist of $449,400 of common costs allocated to the three products based on relative sales, and additional fixed costs of $44,400 (Assurance), $121,400 (Decoder), and $51,900 (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 companys net income.

Assume instead that fixed expenses consist of $143,030 of common costs allocated to the three products equally, and additional fixed costs of $131,400 (Assurance), $292,200 (Decoder), and $100,470 (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).)

Net income

Assurance

Decoder

Company Total