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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 Incremental fixed selling costs Allocated common fixed administrative costs 6,000 units $ 180 $ 140 $ 15 $ 65,000 per year $ 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 $35,000 in incremental contribution margin from those products. What is the financial advantage (disadvantage) of adding the new product line? Multiple Choice $120,000 $80,000 $35,000 $45,000
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