Jackman, Inc., makes and sells many consumer products. The firm's average contribution margin ratio is 22 percent. Management is considering adding a new product that will require an additional $10,000 per month of fixed expenses and will have variable expenses of $8.5 per unit.
| Required: |
| (a) |
Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 22%.
(b) Calculate the number of units of the new product that would have to be sold if the new product is to increase the firm's monthly operating income by $7,800.
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