Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Safe and Secure, Inc. produces three models of home security systems. Information on the three products is given below: Assurance Decoder Burglar Beware Sales $441,900

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

Assurance Decoder Burglar Beware
Sales $441,900 $736,500 $294,300
Variable expenses 220,950 294,600 206,010
Contribution margin 220,950 441,900 88,290
Fixed expenses 181,100 339,900 142,100
Net income $39,850 $102,000 $(53,810 )

Fixed expenses consist of $444,600 of common costs allocated to the three products based on relative sales, and additional fixed costs of $44,200 (Assurance), $120,900 (Decoder), and $53,400 (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.

Compute current net income for Safe and Secure, Inc. (Enter loss using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).)

Net income $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions