Question
Cawley Company makes three models of tasers. Information on the three products is given below. Tingler Shocker Stunner Sales $301,080 $498,030 $199,070 Variable expenses 152,730
Cawley Company makes three models of tasers. Information on the three products is given below. Tingler Shocker Stunner Sales $301,080 $498,030 $199,070 Variable expenses 152,730 191,830 140,270 Contribution margin 148,350 306,200 58,800 Fixed expenses 120,676 230,688 94,635 Net income $ 27,674 $ 75,512 $ (35,835) Fixed expenses consist of $303,100 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $29,252 (Tingler), $79,460 (Shocker), and $34,187 (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
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