The Western Company Is Considering the Addition of a New

question 137

Multiple Choice

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

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Definitions:

Efficient Outcome

A situation in which resources are allocated in the most effective manner, maximizing total benefit and minimizing waste.

Efficient Outcome

An economic situation in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Peace and Quiet

signifies a state of tranquility and serenity, often desired by individuals seeking relief from stress or chaos.

Home Business

A business operated from the owner's residence, often characterized by lower overhead costs and flexible working hours.