ok it hit ences O'Reilly Incorporated makes and sells many consumer products. The firm's average contribution margin ratio is 25%, Management is considering adding a new product that will require an additional $18,000 per month of fixed expenses and will have variable expenses of $9.00 per unit. Required: a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 25%. b. 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 $12,000. Note: Do not round intermediate calculations. a. Selling price b. Number of units per unit
ok it hit ences O'Reilly Incorporated makes and sells many consumer products. The firm's average contribution margin ratio is 25%, Management is considering adding a new product that will require an additional $18,000 per month of fixed expenses and will have variable expenses of $9.00 per unit. Required: a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 25%. b. 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 $12,000. Note: Do not round intermediate calculations. a. Selling price b. Number of units per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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O'Reilly Incorporated makes and sells many consumer products. The firm's average contribution margin ratio is 25%. Management
is considering adding a new product that will require an additional $18,000 per month of fixed expenses and will have variable
expenses of $9.00 per unit.
Required:
a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 25%.
b. 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 $12,000.
Note: Do not round intermediate calculations.
a. Selling price
b. Number of units
per unit
W
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