Computer Boutique sells computer equipment and home office furniture. Currently

Computer Boutique sells computer equipment and home office furniture. Currently the furniture product line takes up approximately 50% of the companys retail floor space. The president of Computer Boutique is trying to decide whether the company should continue offering furniture or just concentrate on computer equipment. If furniture is dropped salaries and other direct fixed costs can be avoided. In addition sales of computer equipment can increase by 13%. Allocated fixed costs are assigned based on relative sales.ComputerHome OfficeEquipmentFurnitureTotalSales$1200000$800000$2000000Less cost of goods sold$700000$500000$1200000Contribution margin$500000$300000$800000Less direct fixed costsSalaries$175000$175000$350000Other$60000$60000$120000Less allocated fixed costsRent$14118$9882$24000Insurance$3529$2471$6000Cleaning$4117$2883$7000Presidents salary$76470$53530$130000Other$7058$4942$12000Total costs$340292$308528$649000Net Income$159708($8528)$151000