Suppose that L&M Manufacturing's management believes that a 10% reduction in the selling price will result in a 30% increase in sales. If this proposed reduction in selling price is implemented, then:
A) profit will decrease by $12,800 in a month.
B) profit will increase by $12,800 in a month.
C) profit will decrease by $32,000 in a month.
D) profit will increase by $32,000 in a month.
A
Explanation: A) ($16.00 - $11.20 ) × (20,000 units) - $7,200 = $88,800
($14.40 - $11.20 ) × (22,000 units) - $7,200 = $76,000
Will decrease operating profit by $12,800
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Freight terms in which the seller pays the transportation costs from the shipping point to the final destination.
What will be an ideal response?