Ajax Corporation is performing a sensitivity analysis on one of its product. The product currently sells for $210 per unit, with variable cost of $90 per unit and fixed costs of $400,000. Ajax currently sells 12,000 units of this product. Ajax is considering raising its price by 15%. If prices increase, then it is expected that units sold will decrease by 10%. Calculate the change in operating income.
A) $196,200 decrease
B) $248,500 increase
C) $248,500 decrease
D) $196,200 increase
Answer: D) $196,200 increase
Business
You might also like to view...
What are the two (2) types of corporate securities?
a. With reserve and without reserve b. Cash and non-cash c. Equity and debt d. Primary and secondary
Business
Which of the following refers to change along the technology innovation curve that allows for the development of products that are less expensive, smaller, and often easier to use?
A) discontinuous innovation B) disruptive innovation C) continuous innovation D) end-user innovation E) radical innovation
Business