Question
Newton Company produces a single product. The company is considering investing in new technology that would decrease the unit variable cost and double the fixed
Newton Company produces a single product. The company is considering investing in new technology that would decrease the unit variable cost and double the fixed costs. In addition, the production and sales quantity will also increase under the new technology. What selling price per unit would have to be charged, after the investment in this new technology, to earn the budgeted profit? Relevant data are provided below: Current annual quantity of production and sales 5,000 units Current contribution margin per unit $5.00 Current selling price per unit $17.00 Current fixed costs per year $15,000 Expected unit variable cost under new technology $7.00 Budgeted profit per year
A.
$18.00
B.
$16.50
C.
$15.00
D.
$21.00
E.
$13.50
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