Carlo Company Makes Bulk Quantities of Cleaning Fluids

question 119

Multiple Choice

Carlo Company makes bulk quantities of cleaning fluids.They currently sell 900 containers a month at a price of $24 per unit.If they added a disinfectant,they could charge $26 per unit for the improved product.It would cost them a total of $4000 per month to make that alteration.What would be the effect on operating profit?

• A) It would increase by $2200.
• B) It would increase by $4000.
• C) It would decline by $2200 .
• D) It would decline by $21,600.

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Definitions:

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded.

Profit

Difference between total revenue and total cost.

Marginal Revenue

The additional income earned from the sale of one more unit of a product or service.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at various prices.