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Anderson Produces Color Cartridges for Inkjet Printers

Question 37

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Anderson produces color cartridges for inkjet printers. Suppose cartridges are sold to mail-order distributors for $12 each and that manufacturing and other costs are as follows:
Anderson produces color cartridges for inkjet printers. Suppose cartridges are sold to mail-order distributors for $12 each and that manufacturing and other costs are as follows:   The variable distribution costs are for transportation to mail-order distributors. Also assume the current monthly production and sales volume is 20,000 and monthly capacity is 25,000 units. If the sales price per unit increases by $2.00 and unit sales decrease by 2,000 units, Anderson's monthly profit would: A)  Decrease by $22,000 B)  Not change C)  Increase by $36,000 D)  Increase by $22,000 The variable distribution costs are for transportation to mail-order distributors. Also assume the current monthly production and sales volume is 20,000 and monthly capacity is 25,000 units.
If the sales price per unit increases by $2.00 and unit sales decrease by 2,000 units, Anderson's monthly profit would:


A) Decrease by $22,000
B) Not change
C) Increase by $36,000
D) Increase by $22,000

Correct Answer:

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