Exercise 12-15 (Algo) Calculate selling price of new product with a target CM ratio LO 8, 9 Backus Inc. makes and sells many consumer products. The firm’s average contribution margin ratio is 26%. Management is considering adding a new product that will require an additional $14,000 per month of fixed expenses and will have variable expenses of $10 per unit. Required: Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 26%.(Round your answer to 2 decimal places.) Calculate the number of units of the new product that would have to be sold if the new product is to increase the firm's monthly operating income by $9,700. (Round your intermediate calculations to 2 decimal places.)
Exercise 12-15 (Algo) Calculate selling price of new product with a target CM ratio LO 8, 9 Backus Inc. makes and sells many consumer products. The firm’s average contribution margin ratio is 26%. Management is considering adding a new product that will require an additional $14,000 per month of fixed expenses and will have variable expenses of $10 per unit. Required: Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 26%.(Round your answer to 2 decimal places.) Calculate the number of units of the new product that would have to be sold if the new product is to increase the firm's monthly operating income by $9,700. (Round your intermediate calculations to 2 decimal places.)
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter7: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 56P: Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic...
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Exercise 12-15 (Algo) Calculate selling price of new product with a target CM ratio LO 8, 9
Backus Inc. makes and sells many consumer products. The firm’s average contribution margin ratio is 26%. Management is considering adding a new product that will require an additional $14,000 per month of fixed expenses and will have variable expenses of $10 per unit.
Required:
- Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 26%.(Round your answer to 2 decimal places.)
- Calculate the number of units of the new product that would have to be sold if the new product is to increase the firm's monthly operating income by $9,700. (Round your intermediate calculations to 2 decimal places.)
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