Oriole Company makes three models of tasers. Information on the three products is given below.

	Tingler	Shocker	Stunner
Sales	$296,000	504,000	200,000
Variable expenses	154,100	197,700	137,700
Contribution margin	141,900	306,300	62,300
Fixed expenses	116,616	228,584	93,500
Net income	25,284	77,716	(31,200)

Fixed expenses consist of $296,000 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 $34,300 (Stunner). 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. James Watt an executive with the company feels stunner line should be discontinued to increase the companys net income.

a) compute current net income for the oriole company

b) compute net income by product line and in total for oriole company if he company discontinued the stunner product line. (Hint Allocate the $296,000 common costs to the two remaining product lines based on their relative sales)

Tingler net income $

shocker net income $

total net income

c) should oriole eliminate stunner product line?

Why or why not?

net income would decrease from $ _____ to $ _____