Curio Enterprises currently manufactures two products,X and Y,for which the following data have been gathered:
*NOTE: All common costs are fixed costs,and they represent the total fixed costs for the company.
Curio is considering adding a new product,Product Z.It is expected that Product Z would sell for $50 per unit,have variable costs of $33 per unit,and that the addition of Product Z would result in one-third of the company's common costs being allocated to each product line.It is expected that 10,000 units of product Z would be produced and sold during the period
Required:
What is the total incremental income in the decision whether or not to manufacture Product Z? Explain why Curio should or should not manufacture Product Z.

Question

Curio Enterprises currently manufactures two products,X and Y,for which the following data have been gathered:
  *NOTE: All common costs are fixed costs,and they represent the total fixed costs for the company.
Curio is considering adding a new product,Product Z.It is expected that Product Z would sell for $50 per unit,have variable costs of $33 per unit,and that the addition of Product Z would result in one-third of the company's common costs being allocated to each product line.It is expected that 10,000 units of product Z would be produced and sold during the period
Required:
What is the total incremental income in the decision whether or not to manufacture Product Z? Explain why Curio should or should not manufacture Product Z.

Quizplus · Accepted Answer

The Answer of Curio Enterprises currently manufactures two products,X and Y,for which the following data have been gathered:
  *NOTE: All common costs are fixed costs,and they represent the total fixed costs for the company.
Curio is considering adding a new product,Product Z.It is expected that Product Z would sell for $50 per unit,have variable costs of $33 per unit,and that the addition of Product Z would result in one-third of the company's common costs being allocated to each product line.It is expected that 10,000 units of product Z would be produced and sold during the period
Required:
What is the total incremental income in the decision whether or not to manufacture Product Z? Explain why Curio should or should not manufacture Product Z.

Curio Enterprises Currently Manufactures Two Products,X and Y,for Which the Following