Velim Electronics manufactures electric shavers and is considering decreasing the price by

$ 3$3

a unit for the coming year. With a

$ 3$3

price decrease, the unit demand is expected to increase by

3030%,

and a high volume materials discount is expected to decrease the variable costs per unit by

$ 2$2

per unit.

	Currently	Projected
Demand	10 comma 00010,000 units	13 comma 00013,000 units
Selling price	$ 50$50	$ 47$47
Variable costs per unit	$ 44$44	$ 42$42

Would you recommend the

$ 3$3

price decrease?

A.

No, because the selling price decreases.

B.

No, because contribution margin per unit increases.

C.

Yes, because demand decreases.

D.

Yes, because operating income increases.