The Western Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows: If the new product is added to the existing product line, then sales of existing products will decline. As a consequence, the contribution margin of the other existing product lines is expected to drop $78,000 per year.
-If the new product is added next year,the increase in net operating income resulting from this decision would be:
A)$387,000
B)$261,000
C)$183,000
D)$207,000

Question

The Western Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows:  If the new product is added to the existing product line, then sales of existing products will decline. As a consequence, the contribution margin of the other existing product lines is expected to drop $78,000 per year.
-If the new product is added next year,the increase in net operating income resulting from this decision would be:
A)$387,000 
B)$261,000 
C)$183,000 
D)$207,000

Quizplus · Accepted Answer

The Answer of  The Western Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows:  If the new product is added to the existing product line, then sales of existing products will decline. As a consequence, the contribution margin of the other existing product lines is expected to drop $78,000 per year.
-If the new product is added next year,the increase in net operating income resulting from this decision would be:
A)$387,000 
B)$261,000 
C)$183,000 
D)$207,000

The Western Company Is Considering the Addition of a New