a 1381965 b 1454700 c 122965 d 195700 Woodridge Corporation

a) $1,381,965

b) $1,454,700

c) $122,965

d) $195,700

Woodridge Corporation manufactures numerous products, one of which is called Alpha-32. The company has provided the following data about this product: Unit sales (a) Selling price per unit Variable cost per unit Traceable fixed expense 78,000 $ 73.00 $58.00 $1,259,000 Management is considering increasing the price of Alpha-32 by 5%, from $73.00 to $76.65. The company\'s marketing managers estimate that this price hike would decrease unit sales by 5%, from 78,000 units to 74100 units·Assuming that the total traceable fixed expense does not change, what net operating income will product Alpha-32 earn at a price of $76.65 if this sales forecast is correct?

Solution

Ans) Option (C) 122965

Sales ( $76.65 X 74100 units) = 5679765

Less: Variable cost ( $58 X 74100 units) = (4297800)

contribution = 1381965

Less : fixed cost = ( 1259000)

Net operating income = 122965