E12-16 Cawley Company makes three models of tasers. Information on the three products is given below. Sales Variable expenses Contribution margin Fixed expenses Net income Tingler $300,000 150,000 150,000 120,000 Shocker $500,000 200,000 300,000 230,000 $ 70,000 Stunner $200,000 145,000 55,000 95,000 $ (40,000) $ 30,000 Fixed expenses consist of $300,000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $30,000 (Tingler), $80,000 (Shocker), and $35,000 (Stunner). The common costs will be incurred regardless of how many mod- els 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 discon- tinued to increase the company's net income. Instructions (a) Compute current net income for Cawley Company. (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