Eastwood Corporation manufactures numerous products, one of which is called Beta-96. The company has provided the following data about this product: Management is considering decreasing the price of Beta-96 by 8%, from $88.00 to $80.96. The company's marketing managers estimate that this price reduction would increase unit sales by 8%, from 86,000 units to 92,880 units. Assuming that the total traceable fixed expense does not change, what net operating income will product Beta-96 earn at a price of $80.96 if this sales forecast is correct?
A) $2,318,285
B) $2,146,560
C) $(184,725)
D) $(13,000)

Question

Eastwood Corporation manufactures numerous products, one of which is called Beta-96. The company has provided the following data about this product:  Management is considering decreasing the price of Beta-96 by 8%, from $88.00 to $80.96. The company's marketing managers estimate that this price reduction would increase unit sales by 8%, from 86,000 units to 92,880 units. Assuming that the total traceable fixed expense does not change, what net operating income will product Beta-96 earn at a price of $80.96 if this sales forecast is correct?
A) $2,318,285 
B) $2,146,560 
C) $(184,725) 
D) $(13,000)

Quizplus · Accepted Answer

The Answer of Eastwood Corporation manufactures numerous products, one of which is called Beta-96. The company has provided the following data about this product:  Management is considering decreasing the price of Beta-96 by 8%, from $88.00 to $80.96. The company's marketing managers estimate that this price reduction would increase unit sales by 8%, from 86,000 units to 92,880 units. Assuming that the total traceable fixed expense does not change, what net operating income will product Beta-96 earn at a price of $80.96 if this sales forecast is correct?
A) $2,318,285 
B) $2,146,560 
C) $(184,725) 
D) $(13,000)

Eastwood Corporation Manufactures Numerous Products, One of Which Is Called