If the Contribution Margin on a New Product Line Is

question 38

Multiple Choice

If the contribution margin on a new product line is $15,fixed costs are $165,000,and the total market for the product is 22,000 units,then the breakeven analysis would recommend that the company

• A)abandon the new product line.
• B)decrease the sales price per unit.
• C)increase fixed costs (such as advertising)to lower the breakeven units.
• D)adopt the new product line.

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Definitions:

Open Account Agreement

A financial arrangement between two parties allowing for the buying and selling of goods and services on credit, without requiring prepayment.

Unfavorable Balance

A situation where a financial balance, such as trade balance or budget, is negative, indicating more outflows than inflows.

Importer

An individual or company that buys goods or services from another country for the purpose of selling them within their own country.

Society of Worldwide Interbank Financial Telecommunications

An international messaging network that financial institutions use for securely transmitting information and instructions related to financial transactions.