Company X operates a small factory where it manufactures two products, C and D. Last year's production
Question:
Company X operates a small factory where it manufactures two products, C and D. Last year's production and sales results are as follows:
Element | C | D |
units sold | 9.000 | 20.000 |
unit selling price | 97 | 75 |
variable cost per unit | 50 | 40 |
fixed cost per unit | 24 | 24 |
For simplicity, the firm averages total fixed costs over the total number of units produced. The research department developed a new product (E) to replace product D. Market research shows that the firm may sell 10,000 E units for $117 next year. The variable cost per unit of E is 46 TL. The introduction of E will lead to a 13% increase in demand for product C and the discontinuation of product D. If the company doesn't launch the new product, it expects next year's results to be the same as last year's.
9. Calculate the net income for the next year if the company does not release product E.
10. Calculate the net income for the next year if the company launches product E.
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1119036432
7th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso