The Cabinet Shoppe is considering the addition of a new line of kitchen cabinets

Question

The Cabinet Shoppe is considering the addition of a new line of kitchen cabinets to its current product lines. Expected cost and revenue data for the new cabinets are as follows: If the new cabinets are added, it is expected that the contribution margin of other product lines at the cabinet shop will drop by $20,000 per year. What is the lowest selling price per unit that could be charged for the new cabinets from the following list and still make it economically desirable to add the new product line? A) $160 B) $164 C) $171 D) $151

Explanation / Answer

A) $160

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