Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Safe and Secure, Inc. produces three models of home security system Information on the throe products is given below: Assurance Decoder Burglar Beware Sales $450,000

image text in transcribed
Safe and Secure, Inc. produces three models of home security system Information on the throe products is given below: Assurance Decoder Burglar Beware Sales $450,000 Variable expenses $750,000 $300,000 225.000 300.000 217.500 Contribution margin 225.000 450,000 82,500 Fixed expenses 180.000 345.000 142.500 Net Income $45.000 $105.000 S100.000 Fixed expenses consist of $450,000 of common costs allocated to the three products based on relative sales, and additional fixed costs of $45,000 (Assurance). $120,000 (Decoder), and $52,500 (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.. Instructions (a) Compute current net income for Safe and Secure, Inc. (b) Compute net income by product line and in total for Safe and Secure, Inc., If the company discontinues the Burglar Beware product line. (Hint: Allocate the $450,000 common costs to the two remaining product lines based on their relative sales.) (c) Should Safe and Secure, Inc., eliminate the Burglar Beware product line? Why or why not? Assume instead that fixed expenses consist of $150,000 of common costs allocated to the three products equally, and additional fixed costs of $130,000 (Assurance). $295,000 (Decoder), and $92,500 (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? (d)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren

3rd Edition

0131800345, 978-0131800342

More Books

Students also viewed these Accounting questions

Question

understand the limitations of classic models of job design.

Answered: 1 week ago

Question

Understand the process of arbitration

Answered: 1 week ago

Question

Know the different variations of arbitration that are in use

Answered: 1 week ago