Answer the Following Questions Using the Information Below:
Velim Electronics

question 170

Multiple Choice

Answer the following questions using the information below:
Velim Electronics manufactures electric shavers and is considering decreasing the price by $2 a unit for the coming year. With a $2 price decrease, the unit demand is expected to increase by 25%, and a high volume materials discount is expected to decrease the variable costs per unit by $1 per unit.
$\begin{array}{lrr}&\text { Currently }&\text { Projected }\\\text { Demand } & 10,000 \text { units } & 12,500 \text { units } \\\text { Selling price } & \$ 51 & \$ 49 \\\text { Variable costs per unit } & \$ 45 & \$ 44\end{array}$
-Einstein Motors,has a capacity to produce 25,000 electric cars.Due to a temporary subsidy announced,there is a sudden increase in demand.Einstein decides to adopt peak-load pricing and charge a premium of 25% over its normal selling price of $2,000.It has already accepted orders for 20,000 units at normal selling price.What is the total contribution to the company on sale of additional 5,000 units if the variable cost per unit is $900?

• A) $10,000,000
• B) $8,000,000
• C) $4,500,000
• D) $4,000,000

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Definitions:

Characteristic Odors

Distinctive smells that are often associated with specific substances, environments, or conditions.

Control Theory

A theory in psychology and sociology which suggests that individuals regulate their own behavior through internal processes to achieve goals or maintain a sense of control.

Overload Theory

A psychological concept proposing that individuals have a limit to the amount of information or stimuli they can process, with overload leading to stress or error.

Pathological Theory

An approach that explains behavior or phenomena as the result of individual disease, dysfunction, or disorder.