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Sam Manufacturing's year-end information from 2017 as follows: Sales (160,000 units) $1,120,000 Cost of goods sold Gross margin Operating expenses 260,000 Operating income $220.000 640.000
Sam Manufacturing's year-end information from 2017 as follows: Sales (160,000 units) $1,120,000 Cost of goods sold Gross margin Operating expenses 260,000 Operating income $220.000 640.000 480,000 Sam is developing the 2018 budget. In 2018 the company would like to decrease selling prices b as a result expects an increase in sales volume by 25%. All other operating kxpenses are e remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost. y 20%, and xpected to Should Sam decrease the selling price in 2018? Yes, because operating income increases for 2018 No, because gross margin decreases for 2018 No, because sales revenue decreases for 2018 Yes, because sales volume increases for 2018
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