Question
Currently, White Corp. sells 1,500 units per month with a selling price of $5 per unit. Contribution Margin is $3,750 and fixed expenses are $2,000.
Currently, White Corp. sells 1,500 units per month with a selling price of $5 per unit. Contribution Margin is $3,750 and fixed expenses are $2,000. White Corp. thinks that they can increase sales to 1,750 units by dropping the selling price by $0.30. All other costs remain constant. Should White Corp. decrease their selling price? Why or why not? A. Yes because overall net income will increase by $725. B. Yes because overall net income will increase by $100. C. There is no change in net income with the decrease in selling price. D. Yes because overall net income will increase by $625.
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