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The vice-president of marketing, Sharon Lee, thinks that her firm can increase sales by 17,000 units for each $5-per-unit reduction in its selling price. The
The vice-president of marketing, Sharon Lee, thinks that her firm can increase sales by 17,000 units for each $5-per-unit reduction in its selling price. The company's current selling price is $90 per unit and variable costs are $54 per unit. Fixed costs are $936,000 per year. The current sales volume is 37,500 units. Answer the following questions: Assuming that Sharon is correct, what is the maximum operating income that the firm could generate yearly? At how many units and at what selling prices per unit would this operating income be generated? Assume that capacity is not a problem and total fixed costs will be the same regardless of volume
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