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Author Question: Advanced Enterprises reports year-end information from 2018 as follows: Sales (160,250 ... (Read 175 times)

mspears3

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Advanced Enterprises reports year-end information from 2018 as follows:

Sales (160,250 units)$968,000
Cost of goods sold 641,000
Gross margin327,000
Operating expenses263,000
Operating income$64,000

Advanced is developing the 2019 budget. In 2019 the company would like to increase selling prices by 14.5%, and as a result expects a decrease in sales volume of 9%. 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 Advanced increase the selling price in 2019?
◦ Yes, because operating income increases for 2019.
◦ Yes, because sales revenue increases for 2019.
◦ No, because sales volume decreases for 2019.
◦ No, because gross margin decreases for 2019.


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Marked as best answer by mspears3 on Mar 6, 2021

rachel

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mspears3

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Reply 2 on: Mar 6, 2021
Gracias!


sarah_brady415

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

 

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