Author Question: Violet Sales Corp, reports the year-end information from 2018 as follows: Sales (35,625 ... (Read 113 times)

cabate · **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 sold

116,000

Gross margin

169,000

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.

shaquita · **Reply #1 on:** Mar 6, 2021

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