ACCOUNTING
Multiple Choice
LeBlanc Lighting manufactures table lamps and is considering raising the price by $10 a unit for the coming year. With a $10 price increase, demand is expected to fall by 2,000 units.
Currently Projected
Demand 20,000 units 18,000 units
Selling price $150 $160
Variable costs per unit $100 $100
Would you recommend the $10 price increase?
a. No, because demand decreased.
b. No, because the selling price increases.
c Yes, because contribution margin per unit increases.
d. Yes, because operating income increases.
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