Question
5 Assume a company is considering adding a new product. The expected cost and revenue data for this product are as follows: Annual sales
5 Assume a company is considering adding a new product. The expected cost and revenue data for this product are as follows: Annual sales Unit selling price Unit variable costs: Production Selling Incremental fixed costs per year: Production Selling 5,000 units $ 60 $ 30.50 $ 6 $ 35,000 $ 45,000 If the company adds this new product, it expects the contribution margin of other product lines to drop by $18,500 per year. What is the lowest price the company could charge and still break-even on the new product?
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