Question
Woodridge Corporation manufactures numerous products, one of which is called Alpha-32. The company has provided the following data about this product: Unit sales (a) 97,000
Woodridge Corporation manufactures numerous products, one of which is called Alpha-32. The company has provided the following data about this product:
Unit sales (a) | 97,000 | ||
Selling price per unit | $ | 75.00 | |
Variable cost per unit | $ | 60.00 | |
Traceable fixed expense | $ | 1,304,000 | |
Management is considering increasing the price of Alpha-32 by 6%, from $75.00 to $79.50. The companys marketing managers estimate that this price hike would decrease unit sales by 5%, from 97,000 units to 92,150 units.Assuming that the total traceable fixed expense does not change, what net operating income will product Alpha-32 earn at a price of $79.50 if this sales forecast is correct?
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The management of Giammarino Corporation is considering introducing a new product--a compact barbecue. At a selling price of $90 per unit, management projects sales of 10,000 units. Launching the barbecue as a new product would require an investment of $60,000. The desired return on investment is 10%. The target cost per barbecue is closest to:
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