A confectionery manufacturer is considering adding a new product to the current range.
Forecast data for the product are as follows.
Incremental fixed costs attributable to the new product are forecast to be $24,000 each period.
The forecast sales volume of 180 units is insufficient to achieve the target profit of $10,000 each period.
Which of the following statements is correct?
A . The margin of safety is negative because the target profit will not be achieved from the forecast sales volume.
B . If the fixed cost is changed to $20,000 the sales volume required to break even will decrease.
C . If the forecast sales volume is changed to 190 units the sales volume required to achieve the target profit will decrease.
D . If the selling price is changed to $510 the sales volume required to achieve the target profit will increase.
Answer: C
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