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Author Question: Velim Electronics manufactures electric shavers and is considering decreasing the price by $3 a unit ... (Read 70 times)

sheilaspns

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Velim Electronics manufactures electric shavers and is considering decreasing the price by $3 a unit for the coming year. With a $3 price decrease, the unit demand is expected to increase by 25%, and a high volume materials discount is expected to decrease the variable costs per unit by $2 per unit.

CurrentlyProjected
Demand50,000 units62,500 units
Selling price$60$57
Variable costs per unit$52$50

Would you recommend the $3 price decrease?
◦ Yes, because demand decreases.
◦ No, because the selling price decreases.
◦ Yes, because operating income increases.
◦ No, because contribution margin per unit increases.


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Marked as best answer by sheilaspns on Mar 6, 2021

zenzy

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sheilaspns

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


meow1234

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Reply 3 on: Yesterday
Gracias!

 

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