Block Island TV currently sells large televisions for​ $380. It has costs of​ $320. A competitor is bringing a new large television to market that will sell for​ $360. Management believes it must lower the price to​ $360 to compete in the market for large televisions. Marketing believes that the new price will cause sales to increase by​ 10%, even with a new competitor in the market. Block Island TV sales are currently​ 150,000 televisions per year.   What is the change in operating income if marketing is correct and only the sales price is​ changed?   A. ​$6,600,000   B. ​$3,000,000   C. ​($2,400,000)   D. ​($6,600,000)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Block Island TV currently sells large televisions for​ $380. It has costs of​ $320. A competitor is bringing a new large television to market that will sell for​ $360. Management believes it must lower the price to​ $360 to compete in the market for large televisions. Marketing believes that the new price will cause sales to increase by​ 10%, even with a new competitor in the market. Block Island TV sales are currently​ 150,000 televisions per year.
 
What is the change in operating income if marketing is correct and only the sales price is​ changed?
 
A.
​$6,600,000
 
B.
​$3,000,000
 
C.
​($2,400,000)
 
D.
​($6,600,000)
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