Answer the following questions using the information below:
Bright Inc., manufactures table lamps and is considering raising the price by $30 a unit for the coming year. With a $30 price increase, demand is expected to fall by 2,000 units.
$\begin{array}{lrr}&\text { Currently }&\text { Projected }\
\text { Demand } & 20,000 \text { units } & 18,000 \text { units } \
\text { Selling price } & \$ 150 & \$ 180 \
\text { Variable costs per unit } & \$ 100 & \$ 100
\end{array}$
-Would you recommend the $30 price increase?
A) No, because demand decreased.
B) No, because the contribution margin decreases.
C) Yes, because inventory turnover increases.
D) Yes, because operating income increases.

Question

Answer the following questions using the information below:
Bright Inc., manufactures table lamps and is considering raising the price by $30 a unit for the coming year. With a $30 price increase, demand is expected to fall by 2,000 units.
 $\begin{array}{lrr}&\text { Currently }&\text { Projected }\
\text { Demand } & 20,000 \text { units } & 18,000 \text { units } \
\text { Selling price } & \$ 150 & \$ 180 \
\text { Variable costs per unit } & \$ 100 & \$ 100
\end{array}$
-Would you recommend the $30 price increase?
A) No, because demand decreased.
B) No, because the contribution margin decreases.
C) Yes, because inventory turnover increases.
D) Yes, because operating income increases.

Quizplus · Accepted Answer

The price increase leads to a higher selling price per unit, and despite the decrease in demand, the overall contribution margin per unit increases, resulting in a higher total operating income.

Answer the Following Questions Using the Information Below: Bright Inc

Answer the Following Questions Using the Information Below:
Bright Inc