Function: SUM; Formula: Add, Divide, Subtract, Multiply; Cell Referencing Using Excel For Incremental Analysis for Elimination of a Product Line Student Work Area Required: Provide input into cells shaded in yellow in this template. Use mathematical formulas with cell references to the Problem or work area as indicated. Use the SUM function with cell references to add amounts as indicated. PROBLEM Cawley Company makes three models of tasers. Information on the three products is given below. Tingler Shocker Stunner Sales $ 300,000 $ 500,000 $ 200,000 Variable expenses 150,000 200,000 145,000 Contribution margin 150,000 300,000 55,000 Fixed expenses 230,000 95,000 Net income $ 30,000 $ 70,000 $ (40,000) a. Compute current net income for Cawley Company. Current net income $ 60,000 120.000 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.) Fixed expenses consist of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model. The common costs will be incurred regardless of how many models are produced. The direct fixed expenses would be eliminated if that model is phased out. These fixed expenses are presented here. Tingler Shocker 267,500 Common cost allocation $ 142,500 $ $ 300,000 Tingler $ 300,000 Allocated fixed common costs Direct fixed expenses: Tingler Shocker Stunner 150,000 30,000 80.000 Sales Variable expenses Contribution margin Fixed expenses Net income Shocker $ 500,000 $ 200,000 300,000 267,500 $ 32,500||$ Total 800,000 350,000 450,000 300,000 40,000 35,000 150,000 142,500 $ 7,500 James Watt, an executive with the company, feels the stunner line should be discontinued to increase the company's net income. c. Should Cawley eliminate the Stunner product line? Why or why not? Cawley should not eliminate the Stunner product line because eliminating will cause net income to decline An elimination would result in a loss of contribution margin of S 55,000 with a Larger increase