Sunland Company makes three models of tasers. Information on the three products is given below. Sales...
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Sunland Company makes three models of tasers. Information on the three products is given below. Sales Variable expenses Contribution margin Fixed expenses Net income Tingler $296,000 147,100 Net income $ 148,900 119,984 Shocker $504,000 200,700 303,300 233,216 $28,916 $70,084 Compute current net income for Sunland Company. Stunner $200,000 138,200 61,800 94,900 Fixed expenses consist of $304,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $30,000 (Tingler), $80,000 (Shocker), and $34,100 (Stunner). The common costs will be incurred regardless of how many models are produced. The direct fixed expenses would be eliminated if that 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. (a) $(33,100) Net income $ (b) Compute net income by product line and in total for Sunland Company if the company discontinues the Stunner product line. (Hint: Allocate the $304,000 common costs to the two remaining product lines based on their relative sales.) Tingler Net Income Shocker Net Income Total Net Income (c) Why or why not? $ LA Net income would $ EA $ tA Should Sunland eliminate the Stunner product line? from $ to $ Sunland Company makes three models of tasers. Information on the three products is given below. Sales Variable expenses Contribution margin Fixed expenses Net income Tingler $296,000 147,100 Net income $ 148,900 119,984 Shocker $504,000 200,700 303,300 233,216 $28,916 $70,084 Compute current net income for Sunland Company. Stunner $200,000 138,200 61,800 94,900 Fixed expenses consist of $304,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $30,000 (Tingler), $80,000 (Shocker), and $34,100 (Stunner). The common costs will be incurred regardless of how many models are produced. The direct fixed expenses would be eliminated if that 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. (a) $(33,100) Net income $ (b) Compute net income by product line and in total for Sunland Company if the company discontinues the Stunner product line. (Hint: Allocate the $304,000 common costs to the two remaining product lines based on their relative sales.) Tingler Net Income Shocker Net Income Total Net Income (c) Why or why not? $ LA Net income would $ EA $ tA Should Sunland eliminate the Stunner product line? from $ to $
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a Compute the current net income for Sunland Company Net IncomeSalesVariable ExpensesFixed Expenses ... View the full answer
Related Book For
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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