Cawley Company makes three models of tasers.

Information on the three products is

given below.
Tingler
Sales

Shocker

Stunner

$299,180

$496,090

$201,710

Variable expenses

150,770

194,360

144,060

Contribution margin

148,410

301,730

57,650

Fixed expenses

120,509

231,357

96,205

Net income

$27,901

$70,373

$(38,555)

Fixed expenses consist of $304,300 of common costs allocated to the three products
based on relative sales, and additional fixed expenses of $29,193 (Tingler), $79,940
(Shocker), and $34,638 (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 companys net income.

Compute current net income for Cawley Company.

Net income

59719

LINK TO TEXT

Compute net income by product line and in total for Cawley Company if the company
discontinues the Stunner product line. (Hint: Allocate the $304,300 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

474
0

Shocker Net Income

319
67

Total Net Income

367
07