Question
Eastwood Corporation manufactures numerous products, one of which is called Beta-96. The company has provided the following data about this product: Unit sales (a) 62,000
Eastwood Corporation manufactures numerous products, one of which is called Beta-96. The company has provided the following data about this product: Unit sales (a) 62,000 Selling price per unit $ 97.00 Variable cost per unit $ 62.00 Traceable fixed expense $ 2,037,844 Management is considering decreasing the price of Beta-96 by 5%, from $97.00 to $92.15. The companys marketing managers estimate that this price reduction would increase unit sales by 8%, from 62,000 units to 66,960 units. Assuming that the total traceable fixed expense does not change, what net operating income will product Beta-96 earn at a price of $92.15 if this sales forecast is correct?
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