Question

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

		Assurance		Decoder		Burglar Beware
Sales		$443,700		$739,500		$299,300
Variable expenses		221,850		295,800		209,510
Contribution margin		221,850		443,700		89,790
Fixed expenses		182,500		347,300		144,300
Net income		$39,350		$96,400		$(54,510	)

Fixed expenses consist of $457,800 of common costs allocated to the three products based on relative sales, and additional fixed costs of $44,300 (Assurance), $119,000 (Decoder), and $53,000 (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 incorrect. Try again.

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

$

Answer 1