Answer the Following Questions Using the Information Below

question 87

Multiple Choice

Answer the following questions using the information below:
After conducting a market research study, Ed Manufacturing decided to produce a new interior door to complement its exterior door line. It is estimated that the new interior door can be sold at a target price of $240. The annual target sales volume for interior doors is 20,000. Ed has target operating income of 20% of sales.
-What is the target operating income?

• A) $960,000
• B) $3,840,000
• C) $4,800,000
• D) $5,760,000

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Definitions:

Profit-Maximizing

A firm's objective of adjusting outputs and pricing to achieve the highest possible profit.

Demand Schedule

A table that shows the quantity of a good or service that consumers are willing to buy at each price point.

Total Cost

Represents the complete cost of production, including both fixed and variable costs, for producing a certain amount of goods or services.

Elastic

Describes a situation in which the supply or demand for a good or service is highly responsive to changes in price.