EPT INSTRUCTOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 7-16 Cawley Compan

Question

EPT INSTRUCTOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 7-16 Cawley Company makes three models of tasers. Information on the three products is given below. Tingler Shocker Stunner $304,800 $501,100 $199,000 Variable expenses 151,000 207,800 138,000 Contribution margin 153,800 293,300 61,000 123,230 232,437 95,733 $30,570 $60,863 $(34,733) Sales Fixed expenses Net income products based on relative sales, and additional fixed expenses of Fixed expenses consist of $307,700 of common costs allocated to the three 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. 0 (Shocker), and $34,800 (Stunner). The common costs will be incurred regardless of how many models are Compute current net income for Cawley Company. Net income s

Explanation / Answer

a Net income = 30570+60863-34733= $56700 b Tingler Shocker Total Sales 304800 501100 805900 Variable expenses 151000 207800 358800 Contribution margin 153800 293300 447100 Fixed expenses 146275 221225 367500 Net income 7525 72075 79600

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