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

		Tingler		Shocker		Stunner
Sales		$296,000		$504,000		$200,000
Variable expenses		145,000		190,000		135,000
Contribution margin		151,000		314,000		65,000
Fixed expenses		114,840		225,160		92,000
Net income		$36,160		$88,840		$(27,000)

Fixed expenses consist of $290,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $29,000 (Tingler), $79,000 (Shocker), and $34,000 (Stunner). The common costs will be incurred regardless of how many models are produced. The direct fixed expenses would be eliminated if that model is phased out. James Watt, an executive with the company, feels the Stunner line should be discontinued to increase the companys net income.

Sales Variable expenses Contribution margin Fixed expenses Net income Tingler Shocker $296,000 $504,000 145,000 190,000 151,000 314.000 114,840 225,160 $36,160 $88,840 Stunner $200,000 135.000 65.000 92,000 $127,000) Fixed expenses consist of $290,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $29,000 (Tingler), $79,000 (Shocker), and $34,000 (Stunner). The common costs will be incurred regardless of how many models are produced. The direct fixed expenses would be eliminated if that 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. (a) Compute current net income for Cawley Company. Net income $ 98,000 (b) Compute net income by product line and in total for Cawley Company if the company discontinues the Stunner product line. (Hint: Allocate the $290,000 common costs to the two remaining product lines based on their relative sales.) Tingler Net Income $ Shocker Net Income $ Total Net Income $ (c) Should Cawley eliminate the Stunner product line? Why or why not? Net income would from $ to $