Buzby Corporation manufactures numerous products,one of which is called Epsilon39.The company has provided the following data about this product:
Required:
a.Management is considering decreasing the price of Epsilon39 by 5%,from $43.00 to $40.85.The company's marketing managers estimate that this price reduction would increase unit sales by 10%,from 60,000 units to 66,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will Epsilon39 earn at a price of $40.85 if this sales forecast is correct?
b.Assuming that the total traceable fixed expense does not change,how many units of Epsilon39 would Buzby need to sell at a price of $40.85 to earn the same net operating income that it currently earns at a price of $43.00? (Round your answer up to the nearest whole number.)

Question

Buzby Corporation manufactures numerous products,one of which is called Epsilon39.The company has provided the following data about this product:
  Required:
a.Management is considering decreasing the price of Epsilon39 by 5%,from $43.00 to $40.85.The company's marketing managers estimate that this price reduction would increase unit sales by 10%,from 60,000 units to 66,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will Epsilon39 earn at a price of $40.85 if this sales forecast is correct?
b.Assuming that the total traceable fixed expense does not change,how many units of Epsilon39 would Buzby need to sell at a price of $40.85 to earn the same net operating income that it currently earns at a price of $43.00? (Round your answer up to the nearest whole number.)

Quizplus · Accepted Answer

The Answer of Buzby Corporation manufactures numerous products,one of which is called Epsilon39.The company has provided the following data about this product:
  Required:
a.Management is considering decreasing the price of Epsilon39 by 5%,from $43.00 to $40.85.The company's marketing managers estimate that this price reduction would increase unit sales by 10%,from 60,000 units to 66,000 units.Assuming that the total traceable fixed expense does not change,what net operating income will Epsilon39 earn at a price of $40.85 if this sales forecast is correct?
b.Assuming that the total traceable fixed expense does not change,how many units of Epsilon39 would Buzby need to sell at a price of $40.85 to earn the same net operating income that it currently earns at a price of $43.00? (Round your answer up to the nearest whole number.)

Buzby Corporation Manufactures Numerous Products,one of Which Is Called Epsilon39