Question
Delphi Company has developed a new product that will be marketed for the first time next year. The product will have variable costs of $18
Delphi Company has developed a new product that will be marketed for the first time next year. The product will have variable costs of $18 per unit. Although the marketing department estimates that 52,500 units could be sold at $38 per unit, Delphis management has allocated only enough manufacturing capacity to produce a maximum of 37,500 units a year. The fixed costs associated with the new product are budgeted at $675,000 for the year. Delphi is subject to a 40% tax rate.
What is the maximum net income that Delphi can earn from sales of the new product in the next fiscal year?
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