The Cabinet Shoppe Is Considering the Addition of a New $\quad$

question 12

Multiple Choice

The Cabinet Shoppe is considering the addition of a new line of kitchen cabinets to its current product lines. Expected cost and revenue data for the new cabinets are as follows:Annual sales. $\quad$$\quad$ 5,000 units
Selling price per unit. $\quad$$\quad$ £180
Variable costs per unit:
Production. $\quad$$\quad$ £120
Selling. $\quad$$\quad$ £15
Avoidable foed costs peryear:
Production. $\quad$$\quad$ £40,000
Selling. $\quad$$\quad$ £80,000
Allocated common fixed costs per year. $\quad$$\quad$ £45,000
-If the new cabinets are added, it is expected that the contribution margin of other product lines at the cabinet shop will drop by £20,000 per year. If new cabinet product line is added next year, the increase in net operating income resulting from this decision would be

• A)£80,000.
• B)£225,000.
• C)£125,000.
• D)£105,000.

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Definitions:

Methane

The simplest alkane, a colorless, odorless gas (CH4), that is the main component of natural gas and a potent greenhouse gas.

Transition State

A high-energy state during a chemical reaction that represents the point of highest energy through which reactants must pass before forming products.

Resonance Stabilized Radical

A radical species whose stability is enhanced by the distribution of its unpaired electron over multiple atoms via resonance.

1-Butene

A simple aliphatic hydrocarbon with the formula C4H8, classified as an alkene due to the presence of a double bond between carbon atoms.