Clarkson Computer Company distributes a specialized wrist support that sells for $30.The company's variable costs are $12 per unit; fixed costs total $360,000 a year.
Required:
a.If sales increase by $41,000 per year, by how much should operating income increase?
b.Last year, Clarkson sold 32,000 wrist supports.The company's marketing manager is convinced that a 6% reduction in the sales price, combined with a $50,000 increase in advertising, will result in a 30% increase in sales volume over last year.Should Clarkson implement the price reduction? Why or why not?

Question

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The Answer of Clarkson Computer Company distributes a specialized wrist support that sells for $30.The company's variable costs are $12 per unit; fixed costs total $360,000 a year.
Required:
a.If sales increase by $41,000 per year, by how much should operating income increase?
b.Last year, Clarkson sold 32,000 wrist supports.The company's marketing manager is convinced that a 6% reduction in the sales price, combined with a $50,000 increase in advertising, will result in a 30% increase in sales volume over last year.Should Clarkson implement the price reduction? Why or why not?

Clarkson Computer Company Distributes a Specialized Wrist Support That Sells