Answer the Following Questions Using the Information Below:
Newcastle Enterprises

question 116

Multiple Choice

Answer the following questions using the information below:
Newcastle Enterprises reports the year-end information from 2018 as follows:
$\begin{array}{lr}\text { Sales (70 000 units) } & \$ 720000 \\\text { Cost of goods sold } & \underline{370000} \\& \\\text { Gross margin } & 350000 \\\text { Operating expenses } & \underline{200000} \\& \\\text { Operating profit } & \underline{ \$ 150000}\end{array}$
Newcastle is developing the 2019 budget.In 2019 the company would like to increase selling prices by 4%,and as a result expects a decrease in sales volume of 10%.All other operating expenses are expected to remain constant.Assume that COGS is a variable cost and that operating expenses are a fixed cost.
-Should Newcastle increase the selling price in 2019?

• A)No,because sales volume decreases for 2019.
• B)Yes,because operating profit is increased for 2019.
• C)Yes,because sales revenue is increased for 2019.
• D)No,because operating profit decreases for 2019.

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Definitions:

Osmotic Pressure

The pressure required to stop the osmotic flow of water across a semipermeable membrane, which arises due to differences in solute concentration.

Leukocyte Count

The number of white blood cells present in a given volume of blood, used as an indicator of immune system health.

Bilirubin

Bile pigment derived from hemoglobin during the destruction of red blood cells.

Erythrocytes

Oxygen-carrying blood cells, also known as red blood cells, which are responsible for delivering oxygen from the lungs to all parts of the body.