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Author Question: Troy City Inc., manufactures a product and is considering raising the price by $20 a unit for the ... (Read 70 times)

Kthamas

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Troy City Inc., manufactures a product and is considering raising the price by $20 a unit for the coming year. With a $20 price increase, demand is expected to fall by 2500 units.

CurrentlyProjected
Demand21,000 units18,500 units
Selling price$170$190
Variable costs per unit$110$110

Would you recommend the $20 price increase?
◦ No, because demand decreased.
◦ No, because the contribution margin decreases.
◦ Yes, because inventory turnover increases.
◦ Yes, because operating income increases.


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Marked as best answer by Kthamas on Mar 6, 2021

amanda_14

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Kthamas

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Reply 2 on: Mar 6, 2021
Gracias!


JCABRERA33

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

 

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