Blossom Company makes three models of tasers. Information on the three products is given below. Sales Variable expenses Contribution margin Fixed expenses Net income Shocker Tingler $296,000 $504,000 145,000 190,000 151,000 314,000 114,840 225,160 $36,160 $88,840 Stunner $200,000 135,000 65,000 92,000 $(27,000) Fixed expenses consist of $290,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $29,000 (Tingler), $79,000 (Shocker), and $34,000 (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.
Blossom Company makes three models of tasers. Information on the three products is given below. Sales Variable expenses Contribution margin Fixed expenses Net income Shocker Tingler $296,000 $504,000 145,000 190,000 151,000 314,000 114,840 225,160 $36,160 $88,840 Stunner $200,000 135,000 65,000 92,000 $(27,000) Fixed expenses consist of $290,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $29,000 (Tingler), $79,000 (Shocker), and $34,000 (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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![(b)
Compute net income by product line and in total for Blossom Company if the company discontinues the Stunner product line. (Hint:
Allocate the $290,000 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?
$
Should Blossom eliminate the Stunner product line?
Net income would
$
from $
to $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb36b02c8-75e7-4ebe-94bb-bb470e00476e%2F2ec122af-8a39-4cd7-bc19-babee3be5112%2Frfoy6bk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(b)
Compute net income by product line and in total for Blossom Company if the company discontinues the Stunner product line. (Hint:
Allocate the $290,000 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?
$
Should Blossom eliminate the Stunner product line?
Net income would
$
from $
to $
![Blossom Company makes three models of tasers. Information on the three products is given below.
Sales
Variable expenses
Contribution margin
Fixed expenses
Net income
(a)
Tingler
Shocker
Stunner
$296,000 $504,000 $200,000
145.000 190,000
151,000 314,000
114,840
225,160
$36,160 $88,840
Net income
Fixed expenses consist of $290,000 of common costs allocated to the three products based on relative sales, as well as direct fixed
expenses unique to each model of $29,000 (Tingler). $79.000 (Shocker), and $34,000 (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.
Compute current net income for Blossom Company.
135,000
65,000
92,000
$(27,000)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb36b02c8-75e7-4ebe-94bb-bb470e00476e%2F2ec122af-8a39-4cd7-bc19-babee3be5112%2Fka76wtrd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Blossom Company makes three models of tasers. Information on the three products is given below.
Sales
Variable expenses
Contribution margin
Fixed expenses
Net income
(a)
Tingler
Shocker
Stunner
$296,000 $504,000 $200,000
145.000 190,000
151,000 314,000
114,840
225,160
$36,160 $88,840
Net income
Fixed expenses consist of $290,000 of common costs allocated to the three products based on relative sales, as well as direct fixed
expenses unique to each model of $29,000 (Tingler). $79.000 (Shocker), and $34,000 (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.
Compute current net income for Blossom Company.
135,000
65,000
92,000
$(27,000)
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