Cabebe Corporation manufactures numerous products, one of which is called Omicron55. The company has provided the following data about this product:
Required:
a. Management is considering decreasing the price of Omicron55 by 4%, from $54.00 to $51.84. The company's marketing managers estimate that this price reduction would increase unit sales by 10%, from 140,000 units to 154,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will Omicron55 earn at a price of $51.84 if this sales forecast is correct?
b. Assuming that the total traceable fixed expense does not change, if Cabebe decreases the price of Omicron55 to $51.84, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $54.00? (Round your answer to the nearest one-tenth of a percent.)

Question

Cabebe Corporation manufactures numerous products, one of which is called Omicron55. The company has provided the following data about this product:
  Required:
a. Management is considering decreasing the price of Omicron55 by 4%, from $54.00 to $51.84. The company's marketing managers estimate that this price reduction would increase unit sales by 10%, from 140,000 units to 154,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will Omicron55 earn at a price of $51.84 if this sales forecast is correct?
b. Assuming that the total traceable fixed expense does not change, if Cabebe decreases the price of Omicron55 to $51.84, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $54.00? (Round your answer to the nearest one-tenth of a percent.)

Quizplus · Accepted Answer

The Answer of Cabebe Corporation manufactures numerous products, one of which is called Omicron55. The company has provided the following data about this product:
  Required:
a. Management is considering decreasing the price of Omicron55 by 4%, from $54.00 to $51.84. The company's marketing managers estimate that this price reduction would increase unit sales by 10%, from 140,000 units to 154,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will Omicron55 earn at a price of $51.84 if this sales forecast is correct?
b. Assuming that the total traceable fixed expense does not change, if Cabebe decreases the price of Omicron55 to $51.84, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $54.00? (Round your answer to the nearest one-tenth of a percent.)

Cabebe Corporation Manufactures Numerous Products, One of Which Is Called