The common costs will be incurred regardless of how many

Reference no: EM13483359

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

	Tingler	Shocker	Stunner
Sales	$296,470	$496,050	$204,050
Variable expenses	146,080	192,430	140,600
Contribution margin	150,390	303,620	63,450
Fixed expenses	117,046	227,180	95,191
Net income	$ 33,344	$ 76,440	$ (31,741)

Fixed expenses consist of $294,100 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $29,554 (Tingler), $80,790 (Shocker), and $34,973 (Stunner). The common costs will be incurred regardless of how many models are produced. The other fixed expenses would be eliminated if a 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.Current Net Income =78,043

Compute net income by product line and in total for Cawley Company if the company discontinues the Stunner product line. (Hint: Allocate the $294,100 common costs to the two remaining product lines based on their relative sales.) (Round answers to the nearest whole dollar, e.g. 5,275.)

Tingler Net Income = ?

Schocker Net Income = ?

Total Net Income= ?

Reference no: EM13483359

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