Assume a company is considering adding a new product line with the following estimated cost and revenue data: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed manufacturing costs. Incremental fixed selling costs Allocated common fixed administrative costs $ $ $ 6,000 units 190 140 15 $66,000 per year $42,000 per year $48,000 per year If the new product line is added, the company expects that it will increase the sales of complementary products, thereby generating $36,000 in incremental contribution margin from those products. What is the lowest selling price per unit that could be charged for the new product line and still allow the company to break-even?
Assume a company is considering adding a new product line with the following estimated cost and revenue data: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed manufacturing costs. Incremental fixed selling costs Allocated common fixed administrative costs $ $ $ 6,000 units 190 140 15 $66,000 per year $42,000 per year $48,000 per year If the new product line is added, the company expects that it will increase the sales of complementary products, thereby generating $36,000 in incremental contribution margin from those products. What is the lowest selling price per unit that could be charged for the new product line and still allow the company to break-even?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Assume a company is considering adding a new product line with the following estimated cost and revenue data:
Annual sales
Selling price per unit
Variable manufacturing costs per unit
Variable selling costs per unit
Incremental fixed manufacturing costs
Incremental fixed selling costs
Allocated common fixed administrative costs
$
$
$
6,000 units
190
140
15
$66,000 per year
$42,000 per year
$48,000 per year
If the new product line is added, the company expects that it will increase the sales of complementary products, thereby generating $36,000 in incremental contribution margin from those products.
What is the lowest selling price per unit that could be charged for the new product line and still allow the company to break-even?
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