Exercise 20-16 Cawley Company makes three models of tasers. Information on the t
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Question
Exercise 20-16 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 Shocker Stunner $304,200 $499,200 $200,100 147,900 192,600 143,100 57,000 93,704 $37,453 $80,451 $(36,704) 156,300 118,847 226,149 306,600 Fixed expenses consist of $295,400 of common costs allocated to the three products based on relaive sales, and additional fixed expenses of $29,300 (Tingler), $79,200 (Shocker), and $34,800 (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 Compute current net income for Cawley Company Net income Compute net income by product line and in total for Cawley Company if the company discontinues the Stunner product line. (Hint: Allocate the $295,400 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 s Shocker Net Income Total Net Income Click if you would like to Show Work for this question: Qnen Show WorkExplanation / Answer
a.net income = $81,200.
working:
current net income:
b.
working:
note :
fixed expenses of tingler = $29,300 + [295,400 * (304, 200 / (304,200+499,200))]
=>$29,300 + 111850 =>141,150.
of shocker = $72,900 + [ 295,400 *(499,200 / (304,200+499,200)]
=>79,200 + 183,550
=>262,450.
tingler 37453 shocker 80451 stunner (36704) current net income $81,200Related Questions
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