The expected costs and revenue data for the new product Assignment | College Homework Help

  • The Dewey-Cheatum and Howe Company is considering adding a new product to its current product line portfolio. The expected costs and revenue data for the new product is as follows:
    • Annual Sales-                                              3000 Units
    • Selling Price per Unit                               $309
      • Variable Cost per Unit:
      • Production                                    $130
      • Selling                                               $ 50   
      • Avoidable Fixed Costs per year:
      • Production                 $51,000        
      • Selling                         $75,000
      • Unavoidable Fixed Costs per year: $54,000

If the new product is added, the sales of the existing products will decline. The Contribution Margin of the existing products is expected to drop $78,000 per year.

Task: Calculate the change to Net Operating Income if, the product is added        

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