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Cumulus Corporation is considering the addition of a new product line. The expected annual revenue and cost data for the new product line are
Cumulus Corporation is considering the addition of a new product line. The expected annual revenue and cost data for the new product line are as follows: Unit sales Selling price Variable manufacturing costs Variable selling and administrative expenses 4,000 units $920 per unit $375 per unit $147 per unit Increase in annual fixed manufacturing costs Increase in annual fixed selling and administrative expenses $360,000 $240,000 If Cumulus adds the new product line, the contribution margin on its existing products is expected to drop $312,000 per year. What is the minimum per-unit selling price that Cumulus must charge to break even on sales of the new product? $838 per unit O $750 per unit O $672 per unit O $600 per u O None of the above
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