The Western Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows: Annual sales Selling price per unit Variable costs per unit: Production Selling Avoidable fixed costs per year: Production 3,000 units $309 $130 $50 $51,000 $75,000 Unavoidable allocated fixed corporate costs per year $54,000 Selling If the new product is added to the existing product line, then sales of existing products will decline. Therefore, the contribution margin of the other existing product lines is expected to drop $78,000 per year. What is the lowest selling price per unit among those listed below that could be charged for the new product and still make it economically desirable to add the new product?
The Western Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows: Annual sales Selling price per unit Variable costs per unit: Production Selling Avoidable fixed costs per year: Production 3,000 units $309 $130 $50 $51,000 $75,000 Unavoidable allocated fixed corporate costs per year $54,000 Selling If the new product is added to the existing product line, then sales of existing products will decline. Therefore, the contribution margin of the other existing product lines is expected to drop $78,000 per year. What is the lowest selling price per unit among those listed below that could be charged for the new product and still make it economically desirable to add the new product?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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answer must be in table format or i will give down vote
Transcribed Image Text:The Western Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for
the new product are as follows:
Annual sales
Selling price per unit
Variable costs per unit:
Production
Selling
Avoidable fixed costs per year:
Production
3,000 units
$309
$130
$50
$51,000
$75,000
Unavoidable allocated fixed corporate
costs per year
$54,000
Selling
If the new product is added to the existing product line, then sales of existing products will decline. Therefore, the contribution margin of
the other existing product lines is expected to drop $78,000 per year.
What is the lowest selling price per unit among those listed below that could be charged for the new product and still make it
economically desirable to add the new product?
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