Carrot Jewelry is considering two mutually exclusive product…
Carrot Jewelry is considering two mutually exclusive product lines, either an emerald ring or a ruby bracelet, which will be introduced next year. The board of directors of the company has established a target net income of $30,000 for the new product line but wishes to maximize profit in any case. For the emerald ring line, Carrot expects to sell 200 rings during the year at a selling price per ring of $1,500. Estimated variable costs are $800 per ring, and fixed costs will amount to $90,000 for the year. For the ruby bracelet line, the company anticipates sales of 500 units at a selling price of $1,100 per bracelet. Fixed costs will amount to $110,000 for the year, and the variable costs will also be $800 each. Carrot Jewelry will have a tax rate of 30% next year. Which one of the following statements is correct?