Thomas Company Has Total Fixed Costs of $360,000 and Variable

question 24

Essay

Thomas Company has total fixed costs of $360,000 and variable costs of $14 per unit. If the unit sales price is reduced from $24 to $20 and advertising is increased by $10,000, sales will increase from 40,000 to 65,000 units. Should Thomas reduce its per unit sales price and pay for the additional advertising? (Support your answer with calculations.)

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Definitions:

Nose Clip

A device designed to clamp the nostrils closed to prevent the entry of water or to block smells, often used during swimming or in environments with unpleasant odors.

Depolarization

A process in which the electrical charge of a cell membrane is reduced, allowing for the initiation of electrical impulses in nerve and muscle cells.

Electrical Impulses

Rapid, transient flows of electric charge that transmit information within the nervous system and across synapses, or power devices like pacemakers.

SA Node

The sinoatrial node, a group of cells in the right atrium of the heart that initiates the heart's electrical impulses, acting as a natural pacemaker.