Answer the Following Questions Using the Information Below

question 75

Multiple Choice

Answer the following questions using the information below:
Ghan Manufacturing produces a single product that sells for $80.Variable costs per unit equal $32.The company expects total fixed costs to be $72 000 for the next month at the projected sales level of 2000 units.In an attempt to improve performance,management is considering a number of alternative actions.Each situation is to be evaluated separately.
-Suppose that management believes that a 10% reduction in the selling price will result in a 10% increase in sales.If this proposed reduction in selling price is implemented:

• A)operating profit will decrease by $8000.
• B)operating profit will increase by $8000.
• C)operating profit will increase by $16 000.
• D)operating profit will decrease by $16 000.

---

Definitions:

Import

Refers to the acquisition of goods or services from a foreign country for domestic use.

Export

The process of sending goods or services to another country for sale.

World Price

The international market price of a commodity or product, determined by global supply and demand forces.

Free Trade

The policy of allowing unrestricted import and export of goods between countries, without tariffs, quotas, or other restrictions.