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Cawley Company makes three models of tasers. Information on the three products is given below. Cawley Company makes three models of tasers. Information on the
Cawley Company makes three models of tasers. Information on the three products is given below.
Cawley Company makes three models of tasers. Information on the three products is given below. Tingler Sales $300,000 Variable expenses 155,000 Contribution margin 145,000 Fixed expenses 127,000 Net income $18,000 Shocker $500,000 190,000 310,000 215,000 $95,000 Stunner $200,000 135,000 65,000 93,000 ($28,000) Fixed expenses consist of $290,000 of common costs allocated to the three products based on relative sales, and The common costs will be incurred regardless of how many models are produced. The other fixed expenses wou James Watt, an executive with the company, feels the Stunner line should be discontinued to increase the comp (a) Compute current net income for Cawley Company. Net income $ (b) Compute net income by product line and in total for Cawley Company if the company discontinues the Stunner (Hint: Allocate the $290,000 common costs to the two remaining product lines based on their relative sales.) (Round intermediate calculations to 4 decimal places, e.g. 15.2500 and final answers to the nearest whole dollar Tingler Net Income $ Shocker Net Income $ Total Net Income $ iven below. ased on relative sales, and additional fixed expenses of $40,000 (Tingler), $70,000 (Shocker), and $35,000 (Stunner). other fixed expenses would be eliminated if a model is phased out. ued to increase the company's net income. discontinues the Stunner product line. on their relative sales.) o the nearest whole dollar, e.g. 5,275.)Step by Step Solution
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