Spark City Computers manufactures small USB Drives and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units.

Current Projected

Demand 79,000 units 72,000 units

Selling price $8.50 $9.25

Incremental cost per unit $5.80 $5.80

Would you recommend the 75-cent price increase?

		No, because the revenue decreased by $59,500
		Yes, because the contribution margin increased by $35,100
		No, because the demand decreased by 7,000 units.
		No, because the revenue decreased by $5,500
		Yes, because the contribution margin increased by $5,500