Answered

Discover the best answers at Westonci.ca, where experts share their insights and knowledge with you. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.

Backus Inc. makes and sells many consumer products. The firm’s average contribution margin ratio is 26%. Management is considering adding a new product that will require an additional $12,000 per month of fixed expenses and will have variable expenses of $9 per unit.Required:a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 25%. (Round your answer to 2 decimal places.)b. Calculate the number of units of the new product that would have to be sold if the new product is to increase the firm's monthly operating income by $7,500. (Do not round intermediate calculations.)

Sagot :

Answer and Explanation:

a. The computation of the selling price is given below:

= $9 ÷ (1 - 0.25)

= $12 per unit

b. The number of units that should be sold in the case when the operating income is increased by $7,500

= ($12,000 + $7,500) ÷ ($12 - $9)

= 6,500 units

Hence, the same should be considered and relevant

We hope our answers were helpful. Return anytime for more information and answers to any other questions you may have. We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. Stay curious and keep coming back to Westonci.ca for answers to all your burning questions.