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Marple company produces numerous products, one of which is called H30. The company has provided the following information about this product: Unit sales Selling price
Marple company produces numerous products, one of which is called H30. The company has provided the following information about this product: Unit sales Selling price per unit Variable cost per unit 300,000 $ 100.00 $60.00 The traceable fixed expense is $4,500,000. Management is considering increasing the selling price of H30 by 20%. Unit sales are estimated to decrease by 15%, due to the increase in the selling price. Assame 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. Assume that the sales forecast is correct. What is the change in the operating income of H30, if Marple company increases the selling price by 20%? If Marple company increases the selling price of H30 by 20%, and would like to earn the same as the current net operating income, how many units of sales should be sold? d. Based on requirements (a) and (b), is it better for Marple company to keep the current selling price of $100 per unit or to increase the selling price by 20%? Why? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)
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