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Jemima's Casuals sells high-class ladies outfits. It has an outlet in Dixie Value Mall. Its marketing policy is to sell every outfit for a fixed
Jemima's Casuals sells high-class ladies outfits. It has an outlet in Dixie Value Mall. Its marketing policy is to sell every outfit for a fixed price of $75. The normal markup is 50% of cost, so selling price is 150% of cost. The fixed costs consist of rent, salaries, etc. and are $5,000 per month. Jemima's Casuals is considering raising the price from $75 per outfit to $90 per outfit. It is currently selling 500 outfits per month. The price increase would cause volume to drop by 10%. Jemima's Casuals should increase the price because operating profit will increase by $3,000 not increase the price because operating profit will be reduced increase the price because operating profit will increase by $5,000 none of the options increase the price because operating profit will increase by $5,500 Question 18 (10 points) PPP is concerned about the reported loss on the mugs they make. It is considering eliminating mugs. If mugs were discontinued, PPP would be able to make and sell an additional 10,000 plates. The effect on operating profit would be a decrease of $12,500 a decrease of $31,250 an increase of $20,000 none of the options an increase of $6,250
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