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Buzby Corporation manufactures numerous products, one of which is called Epsilon-39. The company has provided the following data about this product: - les (a) per
Buzby Corporation manufactures numerous products, one of which is called Epsilon-39. The company has provided the following data about this product: - les (a) per unit S Variable cost per unit 25.00 Contribution margin per unit (b) 18.00 Total contribution margin (a) x (b) Traceable fixed expense $1,404,000 1,040,000 S 364,000 Net operating income Required: a. Management is considering decreasing the price of Epsilon-39 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 78,000 units to 85,800 units. Assuming that the total traceable fixed expense does not change, what net operating income will Epsilon-39 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 Epsilon-39 would Buzby need to sell at a price of $40.85 to earn the same net operating income that whole number.) currently earns at a price of $43.00? (Round your answer up to the nearest a. Net operating income b. Q units
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