Pricing questions: Aside from a home security systems, the company is planning to sell Auto Alarm. They will sell Auto Alarm as solo or as a combo...

Pricing questions:

Aside from a home security systems, the company is planning to sell Auto Alarm.

They will sell Auto Alarm as solo or as a combo with the home security system.

the goal is to achieve the same contribution margin as the home security systems.

The company would like to know how much they should charge for Auto Alarm.

The monitoring of the auto alarm service will be outsourced. The company estimates that

the auto alarm's incremental monitoring cost will be $12 per customer per month. The $12 per

month monitoring cost would be consistent regardless of whether Auto Alarm were sold

as a solo or a combo with home security services.

The device will cost $30.

The reprogramming cost is $12.50 (all device will have to be reprogrammed)

Home Security system Sales Info:

In 2015

Unit Sold 150

Monitoring sales $29,700

Expenses:

System material 33,750

Alarm monitoring 4,455

Installation   7,000

In 2016

Unit sold 325

Monitoring sales $123,750

Expenses:

System material 74,750

Alarm monitoring 21,038

Installation   16,000

System material cost is $230 per system in fiscal 2016; it was $225 in fiscal

2015.

Installation is $100 per system