The Flint Fan Corporation Is Considering the Addition of a New

question 183

Multiple Choice

The Flint Fan Corporation is considering the addition of a new model fan, the F-27, to its current products. The expected cost and revenue data for the F-27 fan are as follows:

If the F-27 is added as a new product, it is expected that the contribution margin of other products will drop by $7,000 per year.
-At what selling price would the new product be just breaking even?

• A)$52.25 per unit
• B)$50.50 per unit
• C)$55.75 per unit
• D)$49.00 per unit

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Definitions:

Sales Dollars

The total revenue generated from the sale of goods and services within a specific period.

Common Fixed Expenses

These are fixed costs that are not directly tied to production levels, such as salaries, rent, and insurance, which are shared across different segments of a business.

Break-Even

The point at which total costs and total revenues are equal, meaning that a business or product is neither making a profit nor sustaining a loss.

Sales Dollars

The total revenue generated from the sale of goods or services by a company before any expenses are deducted.