Question

QueSLIUI View Policies Current Attempt in Progress Cawley Company makes the models oftasers Wormation on the three products is given below Sale Variable penes Contribution margin Foad spentes Net income Tiger Shoe Storer $298.000 $502.000 $200.000 154700 201.500 135.600 143300 300 500 120 764 235.216 $22.516 565.204 $131.600 DEOD Fede consist of $30.000 of common costs allocated to the three products based on relate sales, as well as directed expensesnio cach model of $20.000 (Ting . 560.600 Shocker und $34,400 tuner. The common coat w i r eless of how manymedesa produced. The direct e xpenses would be cominated modelis phased out tive with the comments the Sunetine should James W continued to increase the com m on Comoda current net income for Cawie Company Nations she co co Senarbroduct o sha 300.000 Type here to search

Answer 1

Sales Varaibles Expense contribution Margin Fixed Expense Net operating Margin DATA Tingler Shocker Stunner Total 298000 502000 200000 1000000 154700 201500 135600 491800 143300 300500 64400 508200 120784 235216 96000 452000 22516 65284 -31600 56200 308000 IF Sutnner is Discontinued Allocation of Common Fixed Cost of Tingler Shocker Total Sales ( Allocation Base) 298000 502000 Allocatoin ratio =(division sales /Total Sales 0.3725 0.6275 Allocation 114730193270 800000 308000

Calculation of Net Income of Each division & company Tingler Shocker Total Sales 298000 502000 800000 Varaibles Expense 154700 201500 356200 contribution Margin 143300 300500 443800 Common Fixed Expense 114730 193270 308000 Additional fixed Cost 29000 80600 109600 Total Fixed Cost 143730 273870 417600 Net income -430 26630 26200 Answers a) Comupute Current Net income for Cawley Company Net income 56200 B) Net Income Tingler Net Income -430 Shocker Net income 26630 Total Net Income 26200 C) Should Cawley eliminate the Stunner Product Line ? NO Why or Why Not Net Income Would Reduce(or) Decrease From $56200 To $26200