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

Fixed expenses consist of $$452,800$ of common costs allocated to the three products based on relative sales, and additional fixed costs

of $$44,100($Assurance$),$ $$120,000($Decoder$),$ and $$53,100($Burglar Beware$).$ 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$)$

Your answer is correct.

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

e$.$g$.(2,945)).$

Net income

eTextbook and Media

Solution

Attempts: $1$ of $1$ used

$($b$)$

Compute net income by product line and in total for Wildhorse, Inc., if the company discontinues the Burglar Beware product line.

$($Hint: Allocate the $$452,800$ 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$.(2,945).)$