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Clarington Company makes three models of phasers. Information on the three products is given below. Stunner Double-Set Mega-Power Sales $298,000 $447,000 $186,250 Variable expenses 155,000
Clarington Company makes three models of phasers. Information on the three products is given below. Stunner Double-Set Mega-Power Sales $298,000 $447,000 $186,250 Variable expenses 155,000 200,500 136,500 Contribution margin 143,000 246,500 49,750 Fixed expenses 117,500 204,400 84,200 Net income $25.500 $42,100 ($34,450) Fixed expenses consist of $271.000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $29,800 (Stunner), $75,300 (Double-Set), and $30,000 (Mega-Power). The common costs will be incurred regardless of how many models are produced. The other fixed expenses would be eliminated if a model is discontinued. John Liu, an executive with the company, feels the Mega-Power line should be discontinued to increase the company's net income. Calculate current net income for Clarington Company. Calculate current net income for Clarington Company. Current net income $ eTextbook and Media Question Part Score Calculate net income by product line and in total for Clarington Company if the company discontinues the Mega-Power product line. (Hint: Allocate the $271,000 common costs to the two remaining product lines based on their relative sales.) Stunner Net income eTextbook and Media Double-Set $ Total --/2 eTextbook and Media Question Part Score Should Clarington eliminate the Mega-Power product line? Why or why not? larington eliminate the Mega-Power product line. Elimination of the line would cause net income to eTextbook and Media --16
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