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.
-What is the lowest selling price per unit among those listed below that could be charged for the new product and still make it economically desirable to add the new product?
A)$240
B)$222
C)$291
D)$249

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.
-What is the lowest selling price per unit among those listed below that could be charged for the new product and still make it economically desirable to add the new product?
A)$240 
B)$222 
C)$291 
D)$249

Quizplus · Accepted Answer

To determine the minimum selling price per unit to make the new product economically desirable, we need to compare the selling price to the cost per unit. However, the cost per unit is not given in the question. Therefore, we cannot determine the minimum selling price with the information given. We can only eliminate choices based on their selling price being potentially too high. Choice D is the lowest of the options given, so it is the best choice.

The Western Company Is Considering the Addition of a New