Cawley Company makes three models of tasers. Information on the three products is given below.
|
|
Tingler |
|
Shocker |
|
Stunner |
|
|
| Sales |
|
$296,470 |
|
$496,050 |
|
$204,050 |
|
|
| Variable expenses |
|
146,080 |
|
192,430 |
|
140,600 |
|
|
| Contribution margin |
|
150,390 |
|
303,620 |
|
63,450 |
|
|
| Fixed expenses |
|
117,046 |
|
227,180 |
|
95,191 |
|
|
| Net income |
|
$ 33,344 |
|
$ 76,440 |
|
$ (31,741) |
|
Fixed expenses consist of $294,100 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $29,554 (Tingler), $80,790 (Shocker), and $34,973 (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.Current Net Income =78,043
Compute net income by product line and in total for Cawley Company if the company discontinues the Stunner product line. (Hint: Allocate the $294,100 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 = ?
Schocker Net Income = ?
Total Net Income= ?