Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 146,500
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 146,500 200,000 136,500 Contribution margin 151.500 247,000 49.750 Fixed expenses 125,000 203.500 85,300 Net income $26,500 $43,500 ($35,550) Fixed expenses consist of $280,000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $30,000 (Stunner), $74,500 (Double-Set), and $29,300 (Mega-Power). The common costs will be incurred regardless of Fixed expenses consist of $280.000 of common costs allocated to the three products based on relative sales and additional fored expenses of $30,000 (Stunner). $74,500 (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 it 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 Current net income $ e Textbook and Media Question Part Score /2 Calculate net income by product line and in total for Clarington Company if the company discontinues the Mexa Power product line. (Hint: Allocate the $280,000 common costs to the two remaining product lines based on their relative sales) Stunner Double-Set Total Net income $ eTextbook and Media Question Part Score Should Clarington eliminate the Mega-Power product line? Why or why not? Clarington eliminate the Mega-Power product line. Elimination of the line would cause net income to e Textbook and Media
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started