E7.32 (106) Clarington Company makes three models of phasers. Information on the three products is given below: Sales Variable costs Contribution margin Fixed costs Net income Stunner $320,000 160,000 160,000 131,000 $ 29,000 Double-Set $480,000 200,000 280,000 214,000 $ 66,000 Mega-Power $200,000 130,000 70,000. 100,000 $30,000) Fixed costs consist of $300,000 of common costs allocated to the three products based on relative sales, and additional fixed costs of $35.000 (Stunner), $70,000 (Double-Set), and 840,000 (Mega-Power). The common costs will be incurred regardless of how many models are produced. The other fixed costs 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. Instructions a. Calculate current net income for Clarington Company. b. Calculate net income by product line and in total for Clarington Company if the company discontinues the Mega-Power product line. (Hint: Allocate the $300,000 common costs to the two remaining product lines based on their relative sales.) e. Should Clarington eliminate the Mega-Power product line? Why or why not? Identify relevant costs for different decisions