Please do not give solution in image format thanku Cumulus Corporation is considering the addition of a new product line. The expected annualrevenue and cost data for the new product line are as followsUnit salesSelling priceVariable manufacturing costsVariable selling and administrative expensesIncrease in annual fixed manufacturing costsIncrease in annual fixed selling and administrative expenses4,000 units$920 per unit$375 per unit$147 per unit$360,000$240,000If Cumulus adds the new product line, the contribution margin on its existing products is expected todrop $312,000 per year. What is the minimum per-unit selling price that Cumulus must charge tobreak even on sales of the new product?O $838 per unitO $750 per unit$672 per unitO $600 per unitO None of the above

Lets understand the basics.CONTRIBUTION MARGINContribution Margin is Computed by deducting Total…

Answered: Cumulus Corporation is considering the…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10EB: Keleher Industries manufactures pet doors and sells them directly to the consumer via their web...

See similar textbooks

Similar questions

A company is spending 70,000 per year for inspecting, 60,000 per year for purchasing, and 56,000 per year for reworking products. What is a good estimate of non-value-added costs? a. 126,000 b. 70,000 c. 56,000 d. 130,000
Keleher Industries manufactures pet doors and sells them directly to the consumer via their web site. The marketing manager believes that if the company invests in new software, they will increase their sales by 10%. The new software will increase fixed costs by $400 per month. Prepare a forecasted contribution margin income statement for Keleher Industries reflecting the new software cost and associated increase in sales. The previous annual statement is as follows:
Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.
Wellington, Inc., reports the following contribution margin income statement for the month of May. The company has the opportunity to purchase new machinery that will reduce its variable cost per unit by $10 but will increase fixed costs by 20%. Prepare a projected contribution margin income statement for Wellington, Inc., assuming it purchases the new equipment. Assume sales level remains unchanged.
SOWSEY 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 2,500 units Selling Price per unit P304 Variable Costs per unit: Production P125 Selling P49 Avoidable fixed costs per year: Production P50,000 Selling P75,000 Allocated common corporate costs per year P55,000 If the new product is added, the combined contribution margin of the other existing products lines is expected to drop P65,000 per year. Total common corporate costs would be unaffected by the decision of whether to add the new product. What is the lowest selling price per unit that could be charged for the new product line and still make an additional P2 income per unit?
Your 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 in units 3,000 Selling price per unit $309 Variable costs per unit: Production $130 Selling $50 Traceable annual fixed costs: Production $51,000 Selling $75,000 Allocated annual fixed cost $54,000 If the new product is added to the existing product line, then sales of existing products will decline. As a consequence, the contribution margin of the existing product lines is expected to drop $78,000 per year. What is the increase in net income if the new product is added next year? This is a reverse drop the segment. New CM is positive and new FC and lost CM are negative.
Feta Corporation is considering the addition of a new product line. The expected annual revenue and cost data for the new product line are as follows: Unit sales Selling price Variable manufacturing costs Variable selling & administrative expenses Increase in fixed manufacturing costs Increase in fixed selling & administrative expenses O $225 per unit O $250 per unit O $275 per unit O$300 per unit 2,500 units $304 per unit $126 per unit $49 per unit If Feta adds the new product line, the contribution margin on its existing products is expected to drop $62,500 per year. What is the minimum per-unit selling price that Feta must charge to break even on the production and sale of the new product line? None of the above $50,000 $75,000
Cabin Creek Company is considering adding a new line of kitchen cabinets. The company's accountant provided the following estimated data for these cabinets: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed costs per year: Manufacturing Selling Allocated common costs per year: Manufacturing Selling and administrative 800 units. $ 3,500 $ 1,500 $ 350 $ 475,400 $ 55,000 $ 80,000 $ 112,000 If the kitchen cabinets are added as a new product line, the company expects that the contribution margin earned from selling its other products will decrease by $200,000 per year. Required: 1. What is the annual financial advantage (disadvantage) of adding the new line of kitchen cabinets? 2. What is the lowest selling price per unit that could be charged for the cabinets and still make it economically desirable for the company to add the new product line?
Cabin Creek Company is considering adding a new line of kitchen cabinets. The company's accountant provided the following estimated data for these cabinets: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed costs per year: Manufacturing Selling Allocated common costs per year: Manufacturing Selling and administrative 800 units Required 1 $ 3,510 $ 1,510 $360 If the kitchen cabinets are added as a new product line, the company expects that the contribution margin earned from selling its other products will decrease by $202,000 per year. Required 2 $ 476,400 $ 56,000 Required: 1. What is the annual financial advantage (disadvantage) of adding the new line of kitchen cabinets? 2. What is the lowest selling price per unit that could be charged for the cabinets and still make it economically desirable for the company to add the new product line? $ 81,000 $ 113,000 Complete this question by entering your answers in the…
Cabin Creek Company is considering adding a new line of kitchen cabinets. The company's accountant provided the following estimated data for these cabinets: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed costs per year: Manufacturing Selling Allocated common costs per year: Manufacturing Selling and administrative 800 units $ 3,580 $ 1,580 $ 430 $ 483,400 $ 63,000 $ 88,000 $ 120,000 If the kitchen cabinets are added as a new product line, the company expects that the contribution margin earned from selling its other products will decrease by $216,000 per year. Required: 1. What is the annual financial advantage (disadvantage) of adding the new line of kitchen cabinets? 2. What is the lowest selling price per unit that could be charged for the cabinets and still make it economically desirable for the company to add the new product line? Complete this question by entering your answers in the tabs below. Required…
Cabin Creek Company is considering adding a new line of kitchen cabinets. The company's accountant provided the following estimated data for these cabinets: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed costs per year: Manufacturing Selling r Allocated common costs per year: Manufacturing Selling and administrative 800 units $ 3,570 $ 1,570 $ 420 $ 482,400 $ 62,000 $ 87,000 $ 119,000 If the kitchen cabinets are added as a new product line, the company expects that the contribution margin earned from selling its of products will decrease by $214,000 per year. Required: 1. What is the annual financial advantage (disadvantage) of adding the new line of kitchen cabinets? 2. What is the lowest selling price per unit that could be charged for the cabinets and still make it economically desirable for the company to add the new product line? Complete this question by entering your answers in the tabs below. Required…

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS