D&R Corp. has annual revenues of $256,000, an average contribution margin ratio of 34%, and fixed expenses
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Question:
D&R Corp. has annual revenues of $256,000, an average contribution margin ratio of 34%, and fixed expenses of $114,900.
Required:
- Management is considering adding a new product to the company's product line. The new item will have $8.4 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio.
- If the new product adds an additional $32,400 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in partato break even on the new product?
- If 20,300 units of the new product could be sold at a price of $14.2 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio.
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