Reference no: EM131797504

D&R Corp. has annual revenues of $268,000, an average contribution margin ratio of 33%, and fixed expenses of $102,100.

Required:

a. Management is considering adding a new product to the company's product line. The new item will have $8.6 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. (Round your answer to 2 decimal places.)

b. If the new product adds an additional $30,400 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? (Do not round your intermediate calculation and round your final answer to nearest whole number.)

c. If 24,900 units of the new product could be sold at a price of $14 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. (Round your intermediate calculations to 2 decimal places. Round "Average contribution margin ratio" to 2 decimal places.)