Gwyneth Inc

question 244

Multiple Choice

Gwyneth Inc. currently has a contribution margin of $12 on its only product and sells 40,000 units. Gwyneth Inc. is considering cutting its sales price by $2 to generate an increase in sales of 10,000 units. How will this change affect its operating income?

• A)It will increase operating income by $80,000.
• B)It will decrease operating income by $80,000.
• C)It will decrease operating income by $20,000.
• D)It will increase operating income by $20,000.

Acknowledge the importance and methods of maintaining competitive pricing in the market.

Understand the ethical and legal considerations in pricing strategies.

Know the impact of global trade dynamics on pricing strategies, including tariffs and dumping.

Develop an understanding of revenue maximization strategies and their implementation.

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Definitions:

Cash

Coins, currency (paper money), checks, money orders, and money on deposit that is available for unrestricted withdrawal from banks and other financial institutions.

Internal Control System

A set of procedures and mechanisms implemented by a business to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Cash Receipts

The collection of money, typically in the form of cash or checks, received by a business during its operating activities.

Cash Payments

Transactions involving the outflow of cash to settle obligations or purchase goods and services.