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Assume a company is considering adding a 'new product line with the following estimated cost and revenue data: Annual sales Selling price per unit
Assume a company is considering adding a 'new product line with the following estimated cost and revenue data: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed manufacturing costs 6,000 units $ 180 $ 140 $ 15 $ 65,000 per year Incremental fixed selling costs Allocated common fixed administrative costs $ 40,000 per year $ 45,000 per year If the new product line is added, the company expects that it will increase the sales of complementary products, thereby generating $31,750 in incremental contribution margin from those products. What is the financial advantage (disadvantage) of adding the new product line? Multiple Choice $116.750 $76.750 < Prev 11 of 16 Next >
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