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Would you recommend the $3$3 price decrease? A. No, because the selling price decreases. B. No, because contribution margin per unit increases. C. Yes, because demand decreases. D. Yes, because operating income increases.

Would you recommend the $3$3 price decrease? A. No, because the selling price decreases. B. No, because contribution margin per unit increases. C. Yes, because demand decreases. D. Yes, because operating income increases.

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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Please Introduction and explanation show work please without plagiarism please sir

Velim Electronics manufactures electric shavers and is considering decreasing the price by $3$3 a unit for the coming year. With a $3$3 price decrease, the unit demand is expected to increase by 3030%, and a high volume materials discount is expected to decrease the variable costs per unit by $2$2 per unit. Demand Selling price Variable costs per unit Would you recommend the $3$3 price decrease? Currently 10 comma 00010,000 units $ 50$50 $ 44$44 A. No, because the selling price decrease eases. B. No, because contribution margin per unit increases. C. Yes, because demand decreases. D. Yes, because operating income increases. Projected 13 comma 00013,000 units $ 47$47 $42$42
Transcribed Image Text:Velim Electronics manufactures electric shavers and is considering decreasing the price by $3$3 a unit for the coming year. With a $3$3 price decrease, the unit demand is expected to increase by 3030%, and a high volume materials discount is expected to decrease the variable costs per unit by $2$2 per unit. Demand Selling price Variable costs per unit Would you recommend the $3$3 price decrease? Currently 10 comma 00010,000 units $ 50$50 $ 44$44 A. No, because the selling price decrease eases. B. No, because contribution margin per unit increases. C. Yes, because demand decreases. D. Yes, because operating income increases. Projected 13 comma 00013,000 units $ 47$47 $42$42
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