Question: Bruell Electronics Co. is developing a new product, surge protectors for high- voltage electrical flows. The cost information below relates to the product:
Unit Costs
Direct materials $3.25
Direct labor 4.00
Distribution .75
The company will also be absorbing $120,000 of additional fixed costs associated with this new product. A corporate fixed charge of $20,000 currently absorbed by other products will be allocated to this new product.
My question: Why are we not considering $20,000 in the fixed cost while calculating break even sales?
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Nupur Mahajan
nupur1188@...Hartford CT United States
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