Safe and Secure, Inc. produces three models of home security systems. Information on the three products is given below:

		Assurance		Decoder		Burglar Beware
Sales		$455,400		$759,000		$303,600
Variable expenses		227,700		303,600		212,520
Contribution margin		227,700		455,400		91,080
Fixed expenses		176,400		345,000		142,800
Net income		$51,300		$110,400		$(51,720	)

Fixed expenses consist of $446,600 of common costs allocated to the three products based on relative sales, and additional fixed costs of $44,400 (Assurance), $121,400 (Decoder), and $51,800 (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.

(d)

Partially correct answer iconYour answer is partially correct.

Assume instead that fixed expenses consist of $139,420 of common costs allocated to the three products equally, and additional fixed costs of $128,600 (Assurance), $295,000 (Decoder), and $101,180 (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		$		$		$

YesNo, the total net income for the company is higherlowersame when the Burglar Beware product line is excluded.