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Assume a company is considering adding a new product line with the following estimated cost and revenue data: Annual sales 6,000 units Selling price
Assume a company is considering adding a new product line with the following estimated cost and revenue data: Annual sales 6,000 units Selling price per unit $ 180 Variable manufacturing costs per unit $ 140 Variable selling costs per unit $ 15 Incremental fixed manufacturing costs $ 65,000 per year Incremental fixed selling costs $ 40,000 per year Allocated common fixed administrative costs $ 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? $35,000 $120,000 $45,000 $80,000
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