Sanderson's Woodworking Company is considering the addition of a new line of quilt frames to its current product lines.If the new quilt frames are added to Sanderson's production,contribution margin of the other products is expected to drop by $2,000.Sanderson has summarized the projected revenue and cost for the new line of frames.

a.If Sanderson adds the new quilt frame to its line of products,what will be the increase in operating income?
b.What are three issues that Sanderson should consider before adding the new line?

Question

Sanderson's Woodworking Company is considering the addition of a new line of quilt frames to its current product lines.If the new quilt frames are added to Sanderson's production,contribution margin of the other products is expected to drop by $2,000.Sanderson has summarized the projected revenue and cost for the new line of frames.
  
a.If Sanderson adds the new quilt frame to its line of products,what will be the increase in operating income?
b.What are three issues that Sanderson should consider before adding the new line?

Quizplus · Accepted Answer

The Answer of Sanderson's Woodworking Company is considering the addition of a new line of quilt frames to its current product lines.If the new quilt frames are added to Sanderson's production,contribution margin of the other products is expected to drop by $2,000.Sanderson has summarized the projected revenue and cost for the new line of frames.
  
a.If Sanderson adds the new quilt frame to its line of products,what will be the increase in operating income?
b.What are three issues that Sanderson should consider before adding the new line?

Sanderson's Woodworking Company Is Considering the Addition of a New