Cabebe Corporation Manufactures Numerous Products, One of Which Is Called

question 52

Essay

Cabebe Corporation manufactures numerous products, one of which is called Omicron55. The company has provided the following data about this product:
Required:
a. Management is considering decreasing the price of Omicron55 by 4%, from $54.00 to $51.84. The company's marketing managers estimate that this price reduction would increase unit sales by 10%, from 140,000 units to 154,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will Omicron55 earn at a price of $51.84 if this sales forecast is correct?
b. Assuming that the total traceable fixed expense does not change, if Cabebe decreases the price of Omicron55 to $51.84, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $54.00? (Round your answer to the nearest one-tenth of a percent.)

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Definitions:

Globalization

The process of interaction and integration among people, companies, and governments worldwide, often driven by international trade and investment and aided by information technology.

Multiculturalism

The practice or policy of recognizing, respecting, and potentially celebrating the cultural differences and diversity within a society or institution.

Academic Programs

Structured sequences of courses or studies offered by educational institutions leading to a degree or certificate.

Legal Segregation

The practice of separating people in daily life based on legally enforced racial, ethnic, or other differences, notably practiced in the United States as "Jim Crow" laws until the mid-20th century.