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Cawley Company makes three models of tasers. Information on the three roducts is given below. Fixed expenses consist of common costs allocated to the three
Cawley Company makes three models of tasers. Information on the three roducts is given below. Fixed expenses consist of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each nodel. 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. These fixed expenses are presented here. James Watt, an executive with the company, feels the Stunner line should be discontinued to increase the company's net income. Required: Provide input into cells shaded in yellow in this template. Use mathematical formulas with cell references to the Problem or work area as indicated. Use the SUM function with cell references to add amounts as indicated. a. Compute current net income for Cawley Company. Current net income b. 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.) c. Should Cawley eliminate the Stunner product line? Why or why not
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