Crane Company makes three models of tasers. Information on the three products is given below. Tingler...
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Crane Company makes three models of tasers. Information on the three products is given below. Tingler Shocker $298,000 $502,000 147,600 201,100 Sales Variable expenses Contribution margin Fixed expenses Net income Stunner $200,000 144.900 55,100 95,800 $29,212 $68,088 $(40,700) Net income 150,400 300,900 121,188 232.812 Fixed expenses consist of $306,000 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). $79,200 (Shocker), and $34,600 (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) Compute current net income for Crane Company. Compute net income by product line and in total for Crane Company if the company discontinues the Stunner product line. (Hint: Allocate the $306,000 common costs to the two remaining product lines based on their relative sales.) Tingler Net Income Shocker Net Income Total Net Income Why or why not? $ Net income would $ (c) Should Crane eliminate the Stunner product line? $ from $ to $ Crane Company makes three models of tasers. Information on the three products is given below. Tingler Shocker $298,000 $502,000 147,600 201,100 Sales Variable expenses Contribution margin Fixed expenses Net income Stunner $200,000 144.900 55,100 95,800 $29,212 $68,088 $(40,700) Net income 150,400 300,900 121,188 232.812 Fixed expenses consist of $306,000 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). $79,200 (Shocker), and $34,600 (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) Compute current net income for Crane Company. Compute net income by product line and in total for Crane Company if the company discontinues the Stunner product line. (Hint: Allocate the $306,000 common costs to the two remaining product lines based on their relative sales.) Tingler Net Income Shocker Net Income Total Net Income Why or why not? $ Net income would $ (c) Should Crane eliminate the Stunner product line? $ from $ to $
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a To compute current net income for crane company T ingler Net income 29212 Add S... View the full answer
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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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