What is the change in operating income if marketing is correct and only the sales price is changed?

ACCOUNTING

Multiple Choice

Sheltar’s TV currently sells small televisions for $180. It has costs of $140. A competitor is bringing a new small television to market that will sell for $150. Management believes it must lower the price to $150 to compete in the market for small televisions. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Sheltar’s sales are currently 100,000 televisions per year



What is the change in operating income if marketing is correct and only the sales price is changed?

a. $1,100,000

b. $300,000

c. $(1,100,000)

d. $(2,900,000)

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