Question
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 $150,500
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 $150,500 $190,500 $138,500
Contribution margin $147,500 $256,500 $47,750
Fixed expenses $111,500 $224,400 $87,200
Net income $36,000 $32,100 ($39,450 )
Fixed expenses consist of $289,500 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $29,500 (Stunner), $74,800 (Double-Set), and $29,300 (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.
Calculate net income by product line and in total for Clarington Company if the company discontinues the Mega-Power product line. (Hint: Allocate the $289,500 common costs to the two remaining product lines based on their relative sales.)
Stunner Double-Set Total
Net income $ $ $
THIS IS THE QUESTION I NEED HELP CALCULATING THE NET INCOME IN THE LAST QUESTION....THX
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