Acme Company is considering the addition of a new product line. Management expects annual sales of...

 

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Acme Company is considering the addition of a new product line. Management expects annual sales of the new product to be 5,000 units. Variable production costs are $126 per unit and variable selling and administrative expenses are $31.50 per unit. The new product line would increase Acme's total fixed productions costs by $171,000 and increase Acme's total fixed selling and administrative expenses by $54,000. If Acme adds the new product line, the contribution margin on its existing products is expected to drop $112,500 per year. Acme's total common fixed costs would be unaffected by the addition of the new product. What is the minimum per-unit selling price that Acme must charge to break-even on the production and sale of the new product line? Acme Company is considering the addition of a new product line. Management expects annual sales of the new product to be 5,000 units. Variable production costs are $126 per unit and variable selling and administrative expenses are $31.50 per unit. The new product line would increase Acme's total fixed productions costs by $171,000 and increase Acme's total fixed selling and administrative expenses by $54,000. If Acme adds the new product line, the contribution margin on its existing products is expected to drop $112,500 per year. Acme's total common fixed costs would be unaffected by the addition of the new product. What is the minimum per-unit selling price that Acme must charge to break-even on the production and sale of the new product line?

Answer rating: 100% (QA)

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