Our company produces a product that is currently sold for $70 per unit. We are considering processing it further into an upgraded version of the current product. If we do so, we can sell the product for $90, we will incur additional costs of $395,000, and we can sell 20,000 units

Which of the following is true?

Sell now at $70 since doing so will maximize operating income.

Process further because operating income will increase by $5,000.

Process further because operating income will increase by $7,500.

Process further because operating income will increase by $8,000.

Our company is a price setter and has the following information available for the current year:

• budgeted sales volume, 220,000 units;
• desired operating income as a percentage of total assets, 16%;
• variable costs, $25 per unit;
• fixed costs, $4,000,000; and
• total assets, $12,000,000.

What is our sales price per unit if we used the cost-plus pricing approach?

$49.60

$51.91

$54.60

$50.20