Meyers Corp. has annual revenues of $450,000, an average contribution margin ratio of 35%, and fixed expenses of $175,000.
| Required: |
| (a) |
Management is considering adding a new product to the company's product line. The new item will have $9.75 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. (Omit the "$" sign in your response.)
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| (b) |
If the new product adds an additional $37,800 to Meyers's fixed expenses, how many units of the new product must be sold at the price calculated in requirement a to break even on the new product? (Do not round your intermediate calculations.)
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| (c) |
If 15,000 units of the new product could be sold at a price of $16.00 per unit, and the company's other business did not change, calculate Meyers's total operating income and average contribution margin ratio. (Do not round your intermediate calculations. Round your answers to 2 decimal places. Omit the "$" and "%" signs in your response.)
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