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: annual sales 4,000 units unit selling price $ 58 unit variable costs: production $ 34 selling $ 4 avoidable fixed costs per year: production $20,000 selling $30,000 allocated common fixed costs per year $55,000 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? multiple choice $52.25 per unit $50.50 per unit $55.75 per unit $49.00 per unit

$52.25 per unit

Explanation:

The computation of the selling price is shown below:

= (Unit production variable cost + unit selling variable cost) + {(Production fixed cost + selling fixed cost + Contribution margin) ÷ (annual sales units)}

= $34 + $4 + {($20,000+ $30,000 + $7,000) ÷ (4,000 units)}

= $38 + $14.25

= $52.25

We simply add the variable cost, contribution margin, and the fixed cost

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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