What is the annual financial advantage

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Reference no: EM133649321

Question: Cabin Creek Company is considering adding of a new line of kitchen cabinets. The company's accountant provided the following estimated data for these cabinets: Annual sales $ 800 units Selling price per unit $ 3,570 Variable manufacturing costs per unit $ 1,570 Variable selling costs per unit $ 420 Incremental fixed costs per year: Manufacturing $ 482,400 Selling $ 62,000 Allocated common costs per year: Manufacturing $ 87,000 Selling and administrative $ 119,000 If the kitchen cabinets are added as a new product line, the company expects that the contribution margin earned from selling its other products will decrease by $214,000 per year.

Required: What is the annual financial advantage (disadvantage) of adding the new line of kitchen cabinets?

Reference no: EM133649321

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