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Answer the following questions using the information below: Violet Sales Corp, reports the year-end information from 2016 as follows: Sales (35,000 units) Cost of goods
Answer the following questions using the information below: Violet Sales Corp, reports the year-end information from 2016 as follows: Sales (35,000 units) Cost of goods sold Gross margin Operating expenses Operating income $280,000 105,000 175,000 150,000 $ 25,000 Violet is developing the 2016 budget. In 2016 the company would like to increase selling prices by 3.5%, and as a result expects a decrease in sales volume of 15%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost. Should Violet increase the selling price in 2016? Select one: A. Yes, because sales revenue increases for 2016. B. No, because sales volume decreases for 2016. o C. No, because operating income decreases for 2016. D. Yes, because gross margin increases for 2016
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