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Tri TownVillage sells home, and office furniture. Currently the home product line takes up approximately 50 percent of the company's retail floor space. The president

Tri TownVillage sells home, and office furniture. Currently the home product line takes up approximately 50 percent of the company's retail floor space. The president ofTri TownVillage is trying to decide whether the company should continue offering office furniture or concentrate on home furniture. Below is a product line income statement for the company. If office furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of home furniture can increase by15percent without affecting direct fixed costs. Allocated fixed costs are assigned based on relative sales.

Home Furniture Office Furniture Total

Sales $1,440,000 $1,108,800 $2,548,800

Less cost of goods sold $936,000 $806,400 $1,742,400

______________ _____________ ______________

Contribution margin $504,000 $302,400 $806,400

Less direct fixed costs:

Salaries $176,400 $176,400 $352,800

Other $55,440 $55,440 $110,880

Less allocated fixed costs:

Rent $13,820 $11,1122 $4,932

Insurance $3,690 $2,824 $6,514

Cleaning $4,280 $3,057 $7,337

President's salary $76,080 $61,786 $137,866

Other $6,960 $5,372 $12,332

________ __________ _________

Net income / (loss) $167,330 $(13,591) $153,739

Determine whetherTri TownVillage should discontinue the office furniture line and the financial benefit (cost) of dropping it.(Round answer to 0 decimal places, e.g. 5,275.)

Net income without Office Furniture is $________enter net income without office furniture in dollars. The company

should drop OR should not drop the Home Office Furniture.

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