Key Corporation is considering the addition of a new product. The expected cost and revenue data for the new product are as follows: If the new product is added, the combined contribution margin of the other, existing products is expected to drop $65,000 per year. Total common fixed corporate costs would be unaffected by the decision of whether to add the new product.At what selling price would the new product be just breaking even?
A) $246 per unit
B) $250 per unit
C) $232 per unit
D) $282 per unit

Question

Key Corporation is considering the addition of a new product. The expected cost and revenue data for the new product are as follows:  If the new product is added, the combined contribution margin of the other, existing products is expected to drop $65,000 per year. Total common fixed corporate costs would be unaffected by the decision of whether to add the new product.At what selling price would the new product be just breaking even?
A) $246 per unit 
B) $250 per unit 
C) $232 per unit 
D) $282 per unit

Quizplus · Accepted Answer

The Answer of Key Corporation is considering the addition of a new product. The expected cost and revenue data for the new product are as follows:  If the new product is added, the combined contribution margin of the other, existing products is expected to drop $65,000 per year. Total common fixed corporate costs would be unaffected by the decision of whether to add the new product.At what selling price would the new product be just breaking even?
A) $246 per unit 
B) $250 per unit 
C) $232 per unit 
D) $282 per unit

Key Corporation Is Considering the Addition of a New Product