Cawley Company makes three models of tasers. Information on the three products is given below

Tingler Shocker Stunner

Sales $300,000 $500,000 $200,000

Variable expenses 150,000 200,000 145,000

Contribution margin 150,000 300,000 55,000

Fixed expenses 120,000 230,000 95,000

Net income $30,000 $70,000 $(40,000)

Fixed expenses consist of $300,000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $30,000 (Tingler), $80,000 (Shocker), and $35,000 (Stunner). The common costs will be incurred regardless of how many models are produced. The other fixed expenses would be 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.

Need help with:

1- Compute current net income for Cawley Company.

2- Compute net income by product line and in total for Cawley Company if the company discontinues the Stunner product line. (Hint: Allocate the $300,000 common costs to the two remaining product lines based on their relative sales.)

3-Should Cawley eliminate the Stunner product line? Why or why not?

Thanks!