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Problem 8.2: Super Socks currently produces 3 sock lines and now considers a new sock line. For the new line, the company expects to sell
Problem 8.2: Super Socks currently produces 3 sock lines and now considers a new sock line. For the new line, the company expects to sell 20,000 pairs at a sale price of $10 per pair. Variable product costs will be $6.50 per pair and fixed overhead will be $1.60 per pair. Half of the fixed overhead is directly traceable to the new sock line. To promote the socks, the company proposes commissions of $0.50 per pair and a $10,000 per month advertising campaign. The new line will be allocated $25,000 in fixed corporate costs. Required: Determine the estimated impact of the new sock line on Super Socks company-wide profitability
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