Riven Corporation Has a Single Product Whose Selling Price Is

question 191

Multiple Choice

Riven Corporation has a single product whose selling price is $10. At an expected sales level of $1,000,000, the company's variable expenses are $600,000 and its fixed expenses are $300,000. The marketing manager has recommended that the selling price be increased by 20%, with an expected decrease of only 10% in unit sales. What would be the company's net operating income if the marketing manager's recommendation is adopted?

• A) $132,000
• B) $290,000
• C) $180,000
• D) $240,000

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Definitions:

Demand Forecast

The process of estimating the future demand for products or services in a given market.

Profit Forecast

An estimation of future financial earnings or losses, typically focusing on income and expenses, over a specified period.

Sole Proprietorship

A business structure where a single individual owns, manages, and is responsible for all aspects of the business.

Married Couple

A legally wedded partnership comprising two individuals who have undergone a marriage ceremony and are recognized as spouses.