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Quph Company is considering adding a new type of product, Product K, to its product...

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Accounting

Quph Company is considering adding a new type of product, Product K, to its product lines.

Below are revenue and variable-cost estimates prepared to help analyze this possible product introduction:

Annual Sales 12,500 units
Selling price per unit $50
Unit variable costs:
Production $20
Selling $9

If Product K is introduced, the product line will include $110,000 in annual fixed cost, composed of $27,000 in newly incurred fixed costs in production; $33,000 in newly incurred fixed costs in sales; and $50,000 in allocated corporate-level costs (reducing allocation to other product lines by $50,000).

Also, if Product K is introduced, it will likely boost sales of Quph Company's current products, increasing the total contribution margin from current products by $26,000.

Q. What is the change in the company's net operating income if the new product is introduced?

(Key in a positive number if it is an increase, a negative number if it is a decrease.)

A. $

Answer & Explanation Solved by verified expert
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