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Page 2 of 6 laun. to offer similar touchscreen computers manufacturer was Soko Industries Learnings from lowering product prices) Apple's (AAPL) iPad jump started the

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Page 2 of 6 laun. to offer similar touchscreen computers manufacturer was Soko Industries Learnings from lowering product prices) Apple's (AAPL) iPad jump started the touchscreen computer (incrementa few analysts had ever dreamed possible. Moreover, the popularity of the iPad pushed Apple's competitors allar touchscreen computers. Hewlett Packard offered its Slate product and others soon followed suit. One such urer was Soko Industries. The Soko product, the sPad, had a number of appealing features but the relative of the company did not help product sales. In fact, the sPad was initially sold for $500, and disappointing sales Soko Industries management to consider taking a 15 percent price break on its sPad, which costs $250 to manufacture and sell. Soko goes through with the price adjustment and it leads to total sales of 200,000 sPads, what are the incremental revenues attributable to the new pricing strategy? h Now suppose that for each new sPad it sells, the firm also sells an average of $100 worth of applications on which the firm has 35 percent operating profit margins (i.e., the firm earns $35 in additional operating profits for each $100 in anniention sales). What is the incremental impact on firm operating profits of the new lowerprice strategy under these conditions? If Soko goes through with the price adjustment and it leads to total sales of 200,000 sPads, the incremental revenues attributable to the new pricing strategy is (Select the best choice below.) O A. $35,000,000 OB. $50,000,000 OC. $85,000,000 OD. $100,000,000 b. "By including the $35 in additional operating profits from applications, we also need to include: 200,000 units X $35 - $7,000,000. Thus, the incremental revenus of the project attributable to the new pricing strategy should be $42,000,000." Is the statement above correct? (1) (Select from the drop-down menu.) (1) O False True

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