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Author Question: Flash City Inc. manufactures small flash drives and is considering raising the price by 75 cents a ... (Read 111 times)

joblessjake

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Flash City Inc. manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units.

CurrentProjected
Demand78,000 units71,000 units
Selling price$9.00$9.75
Incremental cost per unit$6.80$6.80

Would you recommend the 75-cent price increase?
◦ No, because demand decreased.
◦ No, because the selling price increases.
◦ Yes, because contribution margin per unit increases.
◦ Yes, because operating profits increase.


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Marked as best answer by joblessjake on Mar 6, 2021

atrochim

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joblessjake

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Reply 2 on: Mar 6, 2021
Great answer, keep it coming :)


bigcheese9

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Reply 3 on: Yesterday
Wow, this really help

 

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