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.
-If the new product is added next year,the financial advantage (disadvantage)resulting from this decision would be:
A) $325,000
B) $200,000
C) $145,000
D) $135,000

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.
-If the new product is added next year,the financial advantage (disadvantage)resulting from this decision would be:
A) $325,000 
B) $200,000 
C) $145,000 
D) $135,000

Quizplus · Accepted Answer

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Key Corporation Is Considering the Addition of a New Product