Fulton Street Market reported the following for the sales of its only product: TOTAL PER UNIT...
Fulton Street Market reported the following for the sales of its only product:
| TOTAL | PER UNIT | |
| SALES | $31,500 | $4.50 |
| VARIABLE EXPENSES | 9,450 | 1.35 |
| CONTRIBUTION MARGIN | 22,050 | $3.15 |
| FIXED EXPENSES | 3,000 | - |
| NET OPERATING INCOME | 19,050 | - |
The company would like to increase its selling price by 50 cents per unit, and feels this would decrease unit sales volume by 10%. Should the company increase the price, and what will the effect on net income be>
A. Yes; $3,500 increase
B.Yes; $945 increase
C.No; $945 decrease
D.No; $1,006 decrease
Be sure to show all work!
Homework Answers
Selling Price increased by 50% = 4.50+0.50 =5
Sales units Reduced by 10% =(31500/4.50) *90% = 6,300 Units
New Operating income = 6,300*(5.00-1.35)-3000= $19,995
Increase in Operating income = $19,995-19,050 = $945
Answer : B) YES ; $945 Increase
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Fulton Street Market reported the following for the sales of its
only product:
TOTAL
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