A Small Business Produces a Single Product and Reports the Following

question 147

Multiple Choice

A small business produces a single product and reports the following data: $$\begin{array} { | l | r | r|} \hline \text { Sales price } & \$ 8.50& \text { per unit } \\\hline \text { Variable cost } & \$ 5.25& \text { per unit } \\\hline \text { Fixed cost } & \$ 22,000& \text { per month } \\\hline & \\\text { Volume } & 10,000& \text { monts per } \\\hline\end{array}$$ The company believes that the volume will go up to 12,000 units if the company reduces its sales price to $7.50.How would this change affect operating income?

• A)It will increase by $5,500.
• B)It will increase by $10,500.
• C)It will decrease by $5,500.
• D)It will decrease by $10,500.

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Definitions:

Qualitative Research

A research methodology that focuses on understanding concepts, thoughts, or experiences through open-ended questions, interviews, or observation, to gain insights or meanings.

Focus Groups

A qualitative research method where a small, diverse group of people is interviewed to gather opinions and perceptions about a specific product, service, concept, or issue.

Consumer Interviews

A qualitative research method involving direct conversations with customers to gain in-depth understanding of their behaviors, preferences, and attitudes.

Integrated Marketing Communications

A strategic approach that combines various forms of communication and marketing channels to provide a clear, consistent, and compelling message about an organization and its products.