ACC 3020 Ch 20 HW Question 5

Cawley Company makes three models of tasers. Information on the three products is given below Tingler Shocker Stunner Sales Variable expenses Contribution margin Fixed expenses Net income $297,700 153,400 144,300 120,314 $23,986 $505,000 196,700 308,300 233,791 $74,509 $198,200 135,500 62,700 95,295 $(32,595) Fixed expenses consist of $ 306,000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $ 29,300 (Tingler),$79,400 (Shocker), and $34,700 (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 $ 306,000 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