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Cawley Company makes three models of tasers. Information an the three products is given below. Tingler Shocker Stunner $200,000 Sales $300,000 $500,000 Variable expenses 150.000
Cawley Company makes three models of tasers. Information an the three products is given below. Tingler Shocker Stunner $200,000 Sales $300,000 $500,000 Variable expenses 150.000 200.000 145,000 55.000 Contribution margin 150,000 300,000 Flxed expenses 120,000 230,000 95,000 $30,000 70,000 (40,000) Net income Fixed expenses consist of $30o,0o0 of commaon costs allocated to the three products based on relative sales, and additional fixed expenses of $30,000 (Tingler), sa0,000 (Shocker), and $35,000 (Stunner). The common costs will be incurred regardless of how many models are produced. The other fixed expenses would be eli minated 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. (c) Should Cawley ellminate the Stunner product line? Why why not
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