Advanced Enterprises Reports Year-End Information from 2018 as Follows

question 157

Multiple Choice

Advanced Enterprises reports year-end information from 2018 as follows:

Advanced is developing the 2019 budget. In 2019 the company would like to increase selling prices by 14.5%, and as a result expects a decrease in sales volume of 9%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost.
Should Advanced increase the selling price in 2019?

• A) Yes, because operating income increases for 2019.
• B) Yes, because sales revenue increases for 2019.
• C) No, because sales volume decreases for 2019.
• D) No, because gross margin decreases for 2019.

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Definitions:

Review Skills

The abilities or techniques used to effectively go over material previously learned, often to prepare for exams or maintain understanding.

Leadership Role

A position that involves guiding, influencing, or directing others towards achieving a common goal or completing a task.

Attentive

Paying close attention to something; noticing or carefully observing.

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A characteristic where a person is more analytical, logical, and detail-oriented, often associated with the left hemisphere of the brain.