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Fountain Corporation manufactures several products, one of which is called M29. The company has provided the following information about this product: Th traceable fixed expense

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Fountain Corporation manufactures several products, one of which is called M29. The company has provided the following information about this product: Th traceable fixed expense is $3,000,000. Management is considering increasing the selling price of M29 by 5%. Unit sales are estimated to decrease by 20%, due to the increase in the selling price. Assume that the total traceable fixed expense does not change. Required: a. Assume that the sales forecast is correct. What is the current net operating income? b. What net operating income will M29 earn if Fountain Corporation increases the selling price by 5% ? c. If Fountain Corporation increases the selling price of M29 by 5%, and would like to earn the same net operating income, how many units of sales should be sold? d. Based on requirement (a), is it better for fountain Corporation to keep the current selling price of $100 per unit or to increase the selling price by 5% ? Why

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