Ohanlon Corporation manufactures numerous products, one of which is called Delta27. The company has provided the following data about this product:
Required:
a. Management is considering increasing the price of Delta27 by 5%, from $62.00 to $65.10. The company's marketing managers estimate that this price hike would decrease unit sales by 10%, from 180,000 units to 162,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will Delta27 earn at a price of $65.10 if this sales forecast is correct?
b. Assuming that the total traceable fixed expense does not change, if Ohanlon increases the price of Delta27 to $65.10, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $62.00? (Round your answer to the nearest one-tenth of a percent.)

Question

Ohanlon Corporation manufactures numerous products, one of which is called Delta27. The company has provided the following data about this product:
  Required:
a. Management is considering increasing the price of Delta27 by 5%, from $62.00 to $65.10. The company's marketing managers estimate that this price hike would decrease unit sales by 10%, from 180,000 units to 162,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will Delta27 earn at a price of $65.10 if this sales forecast is correct?
b. Assuming that the total traceable fixed expense does not change, if Ohanlon increases the price of Delta27 to $65.10, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $62.00? (Round your answer to the nearest one-tenth of a percent.)

Quizplus · Accepted Answer

The Answer of Ohanlon Corporation manufactures numerous products, one of which is called Delta27. The company has provided the following data about this product:
  Required:
a. Management is considering increasing the price of Delta27 by 5%, from $62.00 to $65.10. The company's marketing managers estimate that this price hike would decrease unit sales by 10%, from 180,000 units to 162,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will Delta27 earn at a price of $65.10 if this sales forecast is correct?
b. Assuming that the total traceable fixed expense does not change, if Ohanlon increases the price of Delta27 to $65.10, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $62.00? (Round your answer to the nearest one-tenth of a percent.)

Ohanlon Corporation Manufactures Numerous Products, One of Which Is Called