Oriole Company makes three models of tasers. Information on the three products is given below. Sales Variable expenses Contribution margin. Fixed expenses Net income Net income $ (b) Tingler Net Income Shocker Net Income Compute current net income for Oriole Company. Total Net Income Tingler Shocker $304,000 $496,000 145,600 196,000 (c) 158,400 118,768 Why or why not? $39,632 Fixed expenses consist of $292,000 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 $34,400 (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) Net income would 300,000 Compute net income by product line and in total for Oriole Company if the company discontinues the Stunner product line. (Hint: Allocate the $292,000 common costs to the two remaining product lines based on their relative sales.) $ 224,032 $75,968 $ $ Should Oriole eliminate the Stunner product line? Stunner $200,000 Ofrom $ 141,300 58,700 92,800 $(34,100) to $
Oriole Company makes three models of tasers. Information on the three products is given below. Sales Variable expenses Contribution margin. Fixed expenses Net income Net income $ (b) Tingler Net Income Shocker Net Income Compute current net income for Oriole Company. Total Net Income Tingler Shocker $304,000 $496,000 145,600 196,000 (c) 158,400 118,768 Why or why not? $39,632 Fixed expenses consist of $292,000 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 $34,400 (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) Net income would 300,000 Compute net income by product line and in total for Oriole Company if the company discontinues the Stunner product line. (Hint: Allocate the $292,000 common costs to the two remaining product lines based on their relative sales.) $ 224,032 $75,968 $ $ Should Oriole eliminate the Stunner product line? Stunner $200,000 Ofrom $ 141,300 58,700 92,800 $(34,100) to $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
A-3
Transcribed Image Text:Oriole Company makes three models of tasers. Information on the three products is given below.
Sales
Variable expenses
Contribution margin
Fixed expenses
Net income
Net income $
(b)
Tingler Net Income
Shocker Net Income
Total Net Income
(c)
Tingler
$304,000
145,600
O
158,400
Compute current net income for Oriole Company.
Why or why not?
118,768
Net income would
$39,632
Fixed expenses consist of $292,000 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 $34,400 (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 net income by product line and in total for Oriole Company if the company discontinues the Stunner product line. (Hint:
Allocate the $292,000 common costs to the two remaining product lines based on their relative sales.)
$
Shocker
$
$
$496,000 $200,000
196,000
300,000
O
224,032
$75,968
Should Oriole eliminate the Stunner product line?
Stunner
141,300
from $
58,700
92,800
$(34,100)
to $
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