Barrier Corporation is performing a sensitivity analysis on one of its product. The product currently sells for $75 per unit, with variable cost of $46 per unit and fixed costs of $100,000. Barrier currently sells 80,000 units of this product. Barrier is considering reducing its price by 10%. If prices decrease, then it is expected that units sold will increase by 8%. Calculate the change in operating income.
A) $248,500 increase
B) $462,400 decrease
C) $248,500 decrease
D) $462,400 increase
Answer: B) $462,400 decrease
Business
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