Sandhill, Inc. produces three models of home security systems. Information on the three products is given below: Sales Variable expenses Contribution margin Fixed expenses Net income Assurance $441,900 220,950 220,950 181,100 $39,850 Decoder $736,500 294,600 441,900 339,900 $102,000 Burglar Beware $294,300 206,010 88,290 142,100 $(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 company's net income. (a) Compute current net income for Sandhill, Inc. (Enter loss using either a negative sign preceding the number e.g. -2,945 or parentheses eg. (2,945).) $ Net income e Textbook and Media Save for Later Attempts: 0 of 1 used Submit Answer (c). Should Sandhill, Inc., eliminate the Burglar Beware product line? Why or why not? the total for the company is when the Burglar Beware product line is included. e Textbook and Media Save for Later Attempts: 0 of 1 used Submit Answer (b). Compute net income by product line and in total for Sandhill, Inc., if the company discontinues the Burglar Beware product line. (Hint: Allocate the $444,600 common costs to the two remaining product lines based on their relative sales.) (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 $ $ $ e Textbook and Media Save for Later Attempts: 0 of 1 used Submit Answer (d). Assume instead that fixed expenses consist of $144,910 of common costs allocated to the three products equally, and additional fixed costs of $128,100 (Assurance), $291,600 (Decoder), and $98,490 (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 Sandhill, Inc., if the company discontinues Burglar Beware product line. Should Sandhill, Inc., eliminate the Burglar Beware product line? Why or why not? (Enter loss using either a negative sign preceding the number eg. -2,945 or parentheses eg. (2,945).) Assurance Decoder Company Total Net income $ , the total net income for the company is when the Burglar Beware product line is included. eTextbook and Media Save for Later Attempts: 0 of 1 used Submit
