Pharoah’s managers have determined that variable costs per unit will increase by 20% beginning next month. To offset this increase in costs, they are considering a 12% increase in the sales price. Market research indicates that the price increase will result in a 3% decrease in the number of learning systems Pharoah sells. What will be Pharoah’s expected operating income if the price increase is implemented? *(Round per unit calculations to 2 decimal places e.g. 52.75 and final answer to 0 decimal places, e.g. 5,275.)***Operating income** $ _______ Pharaoh sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The company's income statement from last month is as follows:| | Total | Per Unit ||------------------|-------------|----------|| **Sales revenue** | $756,000 | $54 || **Variable expenses** | 264,600 | 18.90 || **Contribution margin** | 491,400 | 35.10 || **Fixed expenses** | 282,750 | || **Operating income** | $208,650 | | **Explanation:**- **Sales Revenue:** The total income from sales was $756,000, with each unit priced at $54.- **Variable Expenses:** These are costs that vary with production volume, totaling $264,600, or $18.90 per unit.- **Contribution Margin:** This is the amount remaining after variable expenses are subtracted from sales revenue, totaling $491,400 or $35.10 per unit.- **Fixed Expenses:** Costs that do not change with production levels were $282,750.- **Operating Income:** The profit earned from operations, equaling $208,650.

(d) Pharoah's managers have determined that variable costs per unit will increase by 20% beginning next month. To offset this increase in costs, they are considering a 12% increase in the sales price Market research indicates that the price increase will result in a 3% decrease in the number of learning systems Pharoah sells. What will be Pharoah's expected operating income if the price increase is implemented? (Round per unit calculations to 2 decimal places eg. 52.75 and final answer to O decimal places, e.g. 5,275) Operating income $

(d) Pharoah's managers have determined that variable costs per unit will increase by 20% beginning next month. To offset this increase in costs, they are considering a 12% increase in the sales price Market research indicates that the price increase will result in a 3% decrease in the number of learning systems Pharoah sells. What will be Pharoah's expected operating income if the price increase is implemented? (Round per unit calculations to 2 decimal places eg. 52.75 and final answer to O decimal places, e.g. 5,275) Operating income $

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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