Crane Company operates a small factory in which it manufactures two products: A and B. Production and sales result for last year were as follow: Units sold Selling price per unit Unit variable cost Unit fixed cost A 8,320 65 35 15 B 16,640 52 30 15 For purposes of simplicity, the firm allocates total fixed costs over the total number of units of A and B produced and sold. The research department has developed a new product (C) as a replacement for product B. Market studies show that Crane Compar could sell 11,640 units of C next year at a unit selling price of $80. The unit variable cost of C is $39. The introduction of product Cw lead to a 10% increase in demand for product A and discontinuation of product B. If the company does not introduce the new produ it expects next year's result to be the same as last year's.
Crane Company operates a small factory in which it manufactures two products: A and B. Production and sales result for last year were as follow: Units sold Selling price per unit Unit variable cost Unit fixed cost A 8,320 65 35 15 B 16,640 52 30 15 For purposes of simplicity, the firm allocates total fixed costs over the total number of units of A and B produced and sold. The research department has developed a new product (C) as a replacement for product B. Market studies show that Crane Compar could sell 11,640 units of C next year at a unit selling price of $80. The unit variable cost of C is $39. The introduction of product Cw lead to a 10% increase in demand for product A and discontinuation of product B. If the company does not introduce the new produ it expects next year's result to be the same as last year's.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Crane Company operates a small factory in which it manufactures two products: A and B. Production and sales result for last year
were as follow:
Units sold
Selling price per unit
Unit variable cost
Unit fixed cost
A
8,320
65
35
15
B
16,640
52
30
15
For purposes of simplicity, the firm allocates total fixed costs over the total number of units of A and B produced and sold.
The research department has developed a new product (C) as a replacement for product B. Market studies show that Crane Company
could sell 11,640 units of C next year at a unit selling price of $80. The unit variable cost of C is $39. The introduction of product C will
lead to a 10% increase in demand for product A and discontinuation of product B. If the company does not introduce the new product,
it expects next year's result to be the same as last year's.
Transcribed Image Text:(a)
Your answer is correct.
Calculate the net profit before the introduction of Product C.
(b)
Net Profit
CA
eTextbook and Media
Calculate the net profit if Crane Company introduces Product C.
Net Profit $
241,280
CA
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