D&R Corp. has annual revenues of $262,000, an average contribution margin ratio of 33%, and fixed expenses of $101,80o. Required: a. Management is considering adding a new product to the company's product line. The new item will have $8.7 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. b. If the new product adds an additional $29,100 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? c. If 20,900 units of the new product could be sold at a price of $14.2 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. Answer is complete but not entirely correct. Complete this question hy entering vo ur answwers in the tahs below

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 36P: Faldo Company produces a single product. The projected income statement for the coming year, based...
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D&R Corp. has annual revenues of $262,000, an average contribution margin ratio of 33%, and fixed expenses of $101,800.
Required:
a. Management is considering adding a new product to the company's product line. The new item will have $8.7 of variable
costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin
ratio.
b. If the new product adds an additional $29,100 to D&R's fixed expenses, how many units of the new product must be sold at
the price calculated in part a to break even on the new product?
c. If 20,900 units of the new product could be sold at a price of $14.2 per unit, and the company's other business did not
change, calculate D&R's total operating income and average contribution margin ratio.
Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
If 20,900 units of the new product could be sold at a price of $14.20 per unit, and the company's other business did not
change, calculate D&R's total operating income and average contribution margin ratio. (Round your intermediate calculations
to 2 decimal places. Round "Average contribution margin ratio" to 2 decimal places.)
Total operating income
558,780
%
Average contribution margin ratio
36.04
Transcribed Image Text:D&R Corp. has annual revenues of $262,000, an average contribution margin ratio of 33%, and fixed expenses of $101,800. Required: a. Management is considering adding a new product to the company's product line. The new item will have $8.7 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. b. If the new product adds an additional $29,100 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? c. If 20,900 units of the new product could be sold at a price of $14.2 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Required C If 20,900 units of the new product could be sold at a price of $14.20 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. (Round your intermediate calculations to 2 decimal places. Round "Average contribution margin ratio" to 2 decimal places.) Total operating income 558,780 % Average contribution margin ratio 36.04
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