McPherson Company Is Facing a $6 Increase in the Variable

question 116

Multiple Choice

McPherson Company is facing a $6 increase in the variable cost of producing one of its products for the upcoming year. Because of this situation, the sales manager has made a proposal to increase the selling price of the product while increasing the advertising budget at the same time. The price increase will lower sales volume, but the other changes may help the company maintain its profit margins. McPherson has provided the following information regarding the current year results and the proposal made by the sales manager: $$\begin{array} { | l | r | r | } \hline & \text { Current Year } & \text { Proposal } \\\hline \text { Unit sales } & 27,000 & 18,000 \\\hline \text { Sales price per unit } & \$ 48 & \$ 58 \\\hline \text { Variable cost per unit } & \$ 30 & \$ 36 \\\hline \text { Fixed cost } & \$ 76,000 & \$ 96,000 \\\hline\end{array}$$ Relative to the current year, the sales manager's proposal will:

• A) decrease operating income by $90,000.
• B) increase contribution margin by $90,000.
• C) decrease the unit breakeven point.
• D) decrease operating income by $110,000.

Understand the purpose and appropriate usage of different types of graphs in regression analysis.

Interpret the \(R^2\) value correctly in the context of regression analysis.

Know the assumptions and conditions necessary for regression analysis.

Interpret the correlation coefficient (\(r\)) and its relationship to \(R^2\).

---

Definitions:

Emotional Labor

The process by which employees manage their emotions to fulfill the emotional requirements of their job.

Certain Emotions

Specific feelings that are experienced by individuals, which are triggered by particular events or thoughts.

The Conference Board

An organization that provides businesses with research, analysis, and specialized conferences on economic trends and management best practices.

Job Satisfaction

A measure of how content an individual is with their job, encompassing aspects such as work environment, role clarity, and recognition.