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Exercise 20-16 Your answer is partially correct. Try again. Cawley Company makes three models of tasers. Information on the three products is given below. Sales
Exercise 20-16 Your answer is partially correct. Try again. 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 $298,000 153,400 144,600 120,188 $24,412 Shocker $502,000 196,700 305,300 233,012 $72,288 Stunner $200,000 135,500 64,500 95,900 $31.400) Fixed expenses consist of $306,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $29,000 (Tingler), $79,400 (Shocker), and $34,700 (Stunner). The common costs will be incurred regardless of how many models are produced. The direct foxed expenses would be eliminated if that model is phased out. James Watt, an executive with the company, feels the stunner line should be discontinued to increase the company's net income. Compute current net income for Cawley Company. Net income 65,300 (b) Compute net income by product line and in total for Cawley Company if the company discontinues the stunner product line. (Hint: Allocate the $306,000 common costs Compute net income by product line and in total for Cawley Company if the company discontinues the Stunner product line. (Hint: Allocate the $306,000 common costs to the two remaining product lines based on their relative sales.) Tingler Net Income 24.412 Shocker Net Income 72,288 Total Net Income 96,700 (c) Should Cawley eliminate the Stunner product line? No Why or why not? Net income would
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