Cawley Company makes three models of tasers. Information on the three products i

Question

Cawley Company makes three models of tasers. Information on the three products is given below TinglerShocker Stunner $304,800 $501,100 $199,000 Sales Variable expenses 151,000 207,800 138,000 Contribution margin 153,800 293,300 61,000 Fixed expenses 123,230 232,437 95,733 $30,570 $60,863 $(34,733) Net income Fixed expenses consist of $307,700 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $29,900 (Tingler), $79,000 (Shocker), and $34,800 (Stunner). 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. James Watt, an executive with the company, feels the Stunner line should be discontinued to increase the company's net income. Compute current net income for Cawley Company. Net income Compute net income by product line and in total for Cawley Company if the company discontinues the Stunner product line. (Hint: Allocate the $307,700 common costs to the two remaining product lines based on their relative sales.) (Round answers to the nearest whole dollar, e.g. 5,275.) Tingler Net Income Shocker Net Income Total Net Income s

Explanation / Answer

(a)

Net income = Net income of Tingler + Net income of Shocker + Net income of Stunner

= 30,570 + 60,863 + (34,733)

= 56,700

(b)

Tingler

Shocker

Sales 304,800 Variable expenses 151,000 Contribution margin 153,800 Fixed expenses 146,275 [(307,700*304,800/805,900)+29,900] Net Income 7,525

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.