2C2L THE DOLL HOUSE, A VERY PROFITABLE COMPANY, PLANS TO INTRODUCE A...
256.
CSO: 2C2f
LOS: 2C2l
The Doll House, a very profitable company, plans to introduce a new type of doll to its
product line. The sales price and costs for the new dolls are as follows.
Selling price per doll
$100
Variable cost per doll
$60
Incremental annual fixed costs
$456,000
Income tax rate
30%
If 10,000 new dolls are produced and sold, the effect on Doll House’s profit (loss) would
be
a.
$(176,000).
b.
$(56,000).
c.
$(39,200).
d.
$280,000.