yllat d wileypiusx Help I Exercise 7-16 Cawley Company makes three models of tas
ID: 2546683 • Letter: Y
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yllat d wileypiusx Help I Exercise 7-16 Cawley Company makes three models of tasers. Information on the three products is given below Tingler Shocker Stunner $297,000 $496,900$201,800 145,000 198,600 138,500 Sales Variable expenses Contribution margin Fixed expenses Net income 298,300 63,300 ,004 $31,010 $63,994 $(33,704) 152,000 120,990 234,306 97 expenses consist of s308,400 of common costs allocated to the three expenses of $29,00o (ringler), 580.40o (Shocker), model is phased out. and $34,500 (Stunner). The common costs will be incured regardless of how many models are James Watt, an executive with the company, feels the S tunner line should be discontinued to increase the company's net income Compute current net income for Cawley Company Net income s the two remaining product lines based on their relative sales.) (Round answers to the noarest whole dolar .. ,275.) Tingler Net Income s Shocker Total 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 5308,400 common costs to Net IncomesExplanation / Answer
A) Current net income for the company = $(31,010+63,994-33704) = $61,300
B)If stunner is discontinued, then fixed costs of $ 3,08,400 will be divided between tnigler & shocker in the following proportion =$1,15,370 & $1,93,030 respectively
Tingler net income = 152000-115370-29000= $7630
Shockr net income = 298300-193030-80400=$ 24,870
Total net income = $32500
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