Eastwood Corporation manufactures numerous products, one of which is called Beta-96. The company has provided the...
Eastwood Corporation manufactures numerous products, one of which is called Beta-96. The company has provided the following data about this product:
| Unit sales (a) | 52,000 | ||
| Selling price per unit | $ | 76.00 | |
| Variable cost per unit | $ | 46.00 | |
| Traceable fixed expense | $ | 1,406,024 | |
Management is considering decreasing the price of Beta-96 by 6%, from $76.00 to $71.44. The company’s marketing managers estimate that this price reduction would increase unit sales by 5%, from 52,000 units to 54,600 units. Assuming that the total traceable fixed expense does not change, what net operating income will product Beta-96 earn at a price of $71.44 if this sales forecast is correct?
Multiple Choice
$1,322,880
$(17,000)
$(83,144)
$1,389,024
Homework Answers
| Sales (54,600*71.44) | 3,900,624 |
| Variable costs (54,600*46) | 2,511,600 |
| Contribution margin | 1,389,024 |
| Traceable fixed expense | 1,406,024 |
| Net operating income | (17,000) |
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Eastwood Corporation manufactures numerous products, one of
which is called Beta-96. The company has provided the...
$1845360 $1677600 $-302400 $-134640 Eastwood Corporation manufactures numerous products, one of which is called Beta 96....
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