Saulsberry Corporation manufactures numerous products, one of which is called Beta70. The company has provided the following data about this product:
Required:
a. What net operating income is the company earning now on its sales of Beta70?
b. Management is considering increasing the price of Beta70 by 10%, from $60.00 to $66.00. The company's marketing managers estimate that this price hike would decrease unit sales by 15%, from 90,000 units to 76,500 units. Assuming that the total traceable fixed expense does not change, what net operating income will Beta70 earn at a price of $66.00 if this sales forecast is correct?
c. Assuming that the total traceable fixed expense does not change, how many units of Beta70 would Saulsberry need to sell at a price of $66.00 to earn the same net operating income that it currently earns at a price of $60.00? (Round your answer up to the nearest whole number.)

Question

Saulsberry Corporation manufactures numerous products, one of which is called Beta70. The company has provided the following data about this product:
  Required:
a. What net operating income is the company earning now on its sales of Beta70?
b. Management is considering increasing the price of Beta70 by 10%, from $60.00 to $66.00. The company's marketing managers estimate that this price hike would decrease unit sales by 15%, from 90,000 units to 76,500 units. Assuming that the total traceable fixed expense does not change, what net operating income will Beta70 earn at a price of $66.00 if this sales forecast is correct?
c. Assuming that the total traceable fixed expense does not change, how many units of Beta70 would Saulsberry need to sell at a price of $66.00 to earn the same net operating income that it currently earns at a price of $60.00? (Round your answer up to the nearest whole number.)

Quizplus · Accepted Answer

The Answer of Saulsberry Corporation manufactures numerous products, one of which is called Beta70. The company has provided the following data about this product:
  Required:
a. What net operating income is the company earning now on its sales of Beta70?
b. Management is considering increasing the price of Beta70 by 10%, from $60.00 to $66.00. The company's marketing managers estimate that this price hike would decrease unit sales by 15%, from 90,000 units to 76,500 units. Assuming that the total traceable fixed expense does not change, what net operating income will Beta70 earn at a price of $66.00 if this sales forecast is correct?
c. Assuming that the total traceable fixed expense does not change, how many units of Beta70 would Saulsberry need to sell at a price of $66.00 to earn the same net operating income that it currently earns at a price of $60.00? (Round your answer up to the nearest whole number.)

Saulsberry Corporation Manufactures Numerous Products, One of Which Is Called