Calculate net income by product line

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Reference no: EM132850808

Question - Clarington Company makes three models of phasers. Information on the three products is given below:

 

Stunner

Double-Set

Mega-Power

Sales

$298,000

$447,000

$186,250

Variable expenses

$150,500

$190,500

$138,500

Contribution margin

$147,500

$256,500

$47,750

Fixed expenses

$111,500

$224,400

$87,200

Net income

$36,000

$32,100

($39,450)

Fixed expenses consist of $289,500 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $29,500 (Stunner), $74,800 (Double-Set), and $29,300 (Mega-Power). The common costs will be incurred regardless of how many models are produced. The other fixed expenses would be eliminated if a model is discontinued.

Required - Calculate net income by product line and in total for Clarington Company if the company discontinues the Mega-Power product line.

Reference no: EM132850808

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