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Author Question: Violet Sales Corp, reports the year-end information from 2018 as follows: Sales (35,625 ... (Read 237 times)

cabate

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on: Mar 6, 2021
Violet Sales Corp, reports the year-end information from 2018 as follows:

Sales (35,625 units)$285,000
Cost of goods sold116,000
Gross margin169,000
Operating expenses  154,000
Operating income$15,000

Violet is developing the 2019 budget. In 2019 the company would like to increase selling prices by 3.5%, and as a result expects a decrease in sales volume of 14%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost.

Should Violet increase the selling price in 2019?
◦ Yes, because sales revenue increases for 2019.
◦ Yes, because gross margin increases for 2019.
◦ No, because sales volume decreases for 2019.
◦ No, because operating income decreases for 2019.
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by cabate on Mar 6, 2021

shaquita

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Reply #1 on: Mar 6, 2021
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cabate

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Reply 2 on: Mar 6, 2021
Excellent

sailorcrescent

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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