Flash City Inc.manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year.With a 75-cent price increase,demand is expected to fall by 7,000 units.

If the price increase is implemented,operating profit is projected to ________.
A)increase by $35,100
B)decrease by $5,250
C)increase by $5,250
D)decrease by $7,000

Question

Flash City Inc.manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year.With a 75-cent price increase,demand is expected to fall by 7,000 units.

If the price increase is implemented,operating profit is projected to ________.
A)increase by $35,100 
B)decrease by $5,250 
C)increase by $5,250 
D)decrease by $7,000

Quizplus · Accepted Answer

Change in operating income = [72,000 × ($9.25 - $5.80)] - [79,000 × ($8.50 - $5.80)] = Increase of $35,100