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please reference the values in the cell Function: SUM; Formula: Add, Divide, Subtract, Multiply; Cell Referencing E7.16 Using Excel For Incremental Analysis for Elimination of
please reference the values in the cell
Function: SUM; Formula: Add, Divide, Subtract, Multiply; Cell Referencing E7.16 Using Excel For Incremental Analysis for Elimination of a Product Line PROBLEM Cawley Company makes three models of tasers. Information on the three products is given below. 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. Sales Variable expenses Contribution margin Fixed expenses Net income Tingler Shocker $ 300,000 $ 500,000 $ 150,000 200,000 150,000 300,000 120,000 230,000 $ 30,000 $ 70,000 $ Stunner 200,000 145,000 55,000 95,000 (40,000) a. Current net income b. Tingler Shocker Common cost allocation Tingler Shocker Total 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 nresented here Allocated fixed common costs $ 300,000 Direct fixed expenses: Tingler 30,000 Shocker 80,000 Stunner 35,000 Sales Variable expenses Contribution margin Fixed expenses Net income C. Cawley the Stunner product line because eliminating will cause An elimination would result in pf contribution James Watt, an executive with the company, feels the Stunner line should be discontinued to increase the company's net income. margin of with a of fixed expenses. 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 c. Should Cawley eliminate the Stunner product line? Why or why notStep by Step Solution
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