Refer to the Joe’s Coffee House information below.
Joe’s Coffee House
Joe’s Coffee House has the following information available for the month of July:
$\begin{array}{lr}
\text { Sales }(2500 \text { cups) } & \$ 7500 \
\text { Variable costs } & 3250 \
\text { Fixed costs } & 4000 \
\text { Net Income } & \$ \quad 250
\end{array}$
-All else being equal,if Joe's increases the sales price per unit by 10%,net income will:

Question

Quizplus · Accepted Answer

The current sales price per unit is $3 ($7500/2500 cups). A 10% increase would make the new price $3.30 per unit. With the same number of units sold (2500), the new sales revenue would be $8250 ($3.30 * 2500). Variable costs remain the same ($3250), and fixed costs are also unchanged ($4000). The new net income would be $8250 - $3250 - $4000 = $1000, which is $750 higher than the original net income of $250.

Refer to the Joe’s Coffee House Information Below -All Else Being Equal,if Joe's Increases the Sales Price Per