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Question 3: Pricing decisions Total fixed costs are $15,000. Unit variable cost is $20. At current selling price of $50, you sell 1,000 units
Question 3: Pricing decisions Total fixed costs are $15,000. Unit variable cost is $20. At current selling price of $50, you sell 1,000 units per month. If you reduce the price by 10%, sale volume will increase to 1,700 units Compute profit at the original price: Compute profit at the reduced price: Should you reduce the price? O YES, because profit will increase by $2.500 YES, because revenue will increase by 50.500 ONO, because a lower price always reduces profit
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Financial Accounting
Authors: Belverd E. Needles, Marian Powers
11th edition
1133769314, 053847601X, 9781133715023, 978-1133769316, 1133715028, 978-0538476010
