Frazer Corp Sells Several Products If the Company Decides to Lower Its Selling Price by Is

question 68

Multiple Choice

Frazer Corp sells several products.Information of average revenue and costs is as follows:
$\begin{array}{ll}\text { Selling price per unit } & \$ 28.50 \\\text { Variable costs per unit: } & \\\text { Direct material } & \$ 6.00 \\\text { Direct manufacturing labor } & \$ 1.45 \\\quad \text { Manufacturing overhead } & \$ 0.85 \\\quad \text { Selling costs } & \$ 2.50 \\\text { Annual fixed costs } & \$ 135,000\end{array}$
If the company decides to lower its selling price by 14.25%,but continues to sell 16,000 units,the operating income is reduced by ________.

• A)$64,960
• B)$135,000
• C)$13,200
• D)$16,000

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Definitions:

Marketing Strategy

A firm’s target market, marketing mix, and method of obtaining a sustainable competitive advantage.

Vision

A forward-looking statement or concept that outlines what an organization aspires to achieve in the future, guiding its strategic decisions and direction.

Product's Price

The monetary value assigned to a product by a company, reflecting costs, market demand, and competitive pricing, which consumers are expected to pay to acquire it.

Value

Reflects the relationship of benefits to costs, or what the consumer gets for what he or she gives.