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Arma Ltd manufactures notebooks and is considering increasing the price by 20p per unit for the coming month. This is expected to lead to a fall in demand by 2,000 units.                                                            Currently          Projected      Demand                                  30,000 units       28,000 units      Selling price                                         £1.8                    £2      Cost per unit                                       £1.1                 £1.1     If Arma implemented the price increase, operating profit is expected to?     a. increase by £2,000   b. None of the above   c. increase by £4,200   d. decrease by £4,200

Arma Ltd manufactures notebooks and is considering increasing the price by 20p per unit for the coming month. This is expected to lead to a fall in demand by 2,000 units.                                                            Currently          Projected      Demand                                  30,000 units       28,000 units      Selling price                                         £1.8                    £2      Cost per unit                                       £1.1                 £1.1     If Arma implemented the price increase, operating profit is expected to?     a. increase by £2,000   b. None of the above   c. increase by £4,200   d. decrease by £4,200

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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  1. Arma Ltd manufactures notebooks and is considering increasing the price by 20p per unit for the coming month.

    This is expected to lead to a fall in demand by 2,000 units. 

     

                                                            Currently          Projected

         Demand                                  30,000 units       28,000 units

         Selling price                                         £1.8                    £2

         Cost per unit                                       £1.1                 £1.1

     

     

    If Arma implemented the price increase, operating profit is expected to?

     

      a.

    increase by £2,000
      b.

    None of the above
      c.

    increase by £4,200
      d.

    decrease by £4,200
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