Cumulus 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 and administrative expenses Increase in annual fixed manufacturing costs Increase in annual fixed selling and administrative expenses 4,000 units $920 per unit $375 per unit $147 per unit O $838 per unit O $750 per unit O $672 per unit O $600 per unit O None of the above $360,000 $240,000 If Cumulus adds the new product line, the contribution margin on its existing products is expected to drop $312,000 per year. What is the minimum per-unit selling price that Cumulus must charge to break even on sales of the new product?
Cumulus 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 and administrative expenses Increase in annual fixed manufacturing costs Increase in annual fixed selling and administrative expenses 4,000 units $920 per unit $375 per unit $147 per unit O $838 per unit O $750 per unit O $672 per unit O $600 per unit O None of the above $360,000 $240,000 If Cumulus adds the new product line, the contribution margin on its existing products is expected to drop $312,000 per year. What is the minimum per-unit selling price that Cumulus must charge to break even on sales of the new product?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Cumulus 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 and administrative expenses
Increase in annual fixed manufacturing costs
Increase in annual fixed selling and administrative expenses
4,000 units
$920 per unit
$375 per unit
$147 per unit
$360,000
$240,000
If Cumulus adds the new product line, the contribution margin on its existing products is expected to
drop $312,000 per year. What is the minimum per-unit selling price that Cumulus must charge to
break even on sales of the new product?
O $838 per unit
O $750 per unit
$672 per unit
O $600 per unit
O None of the above
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