Management is considering making a new product using product As equipment. If the new products selling price per unit were $10, its variable costs were $5, and its advertising costs were the same as for product A, how many units of the new product would the company have to sell to make the switch from product A to the new product worthwhile?

"Problem 8-29 (Part Level Submission) Sandhill Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as follows: Total Sales 2,221,000 $1,402,000 $1,819,600 $5,442,600 Variable expenses 1,688,000 601,300 1,083,800 3,373,100 Contribution margin $533,000 $800,700 $735,800 $2,069,500 Advertising expense $514,000 $427,000 $522,000 $1,463,000 Depreciation expense Corporate expenses 15,300 10,600 20,100 46,000 94,700 84,400105,900 285,000 Total fixed expenses $624,000 $522,000 $648,000 $1,794,000 Operating income $(91,000 $278,700 $87,800 $275,500 Advertising expense - Specific to each product. Depreciation expense Specific to each product; no other use available, no resale value. Corporate expenses-Allocated based on number of employees. Your answer is correct. Restate the income statement in segment margin format. Total ales Revenue 2,221,000 s1,402,000 S1,819,600 $5,442,600 ariable expenses 688,000 01,300 1,083,800 3,373,100 ontribution margin 33,000 00,700 Less Direct fixed expenses dvertisin 514,000) 427,000 B 22,000 463,000 Depreciation 5,300 0,60 0,100 6,000 $863,100 $93,00 ,700 560,500 85,000 275,500 eament margi Less Common fixed expenses erating prof Your answer is correct. What would be the effect on income if product A were dropped? Net income wouldecreasel by $119,0001 Attempts: 5 of 15 used Management is considering making a new product using product A's equipment. If the new product's selling price per unit were $10, its variable costs were $5, and its advertising costs were the same as for product A, how many units of the new product would the company have to sell to make the switch from product A to the new product worthwhile? (Round answers to 0 decimal places, e.g. 125.) Units