Gordy Corporation's Management Has Found That Every 3% Increase in the Selling

question 49

Multiple Choice

Gordy Corporation's management has found that every 3% increase in the selling price of one of the company's products leads to a 6% decrease in the product's total unit sales. The product's absorption costing unit product cost is $22.00. The variable production cost of the product is $6.80 per unit and the variable selling and administrative cost is $2.40 per unit. According to the formula in the text, the product's profit-maximizing price is closest to:

• A)$17.77
• B)$31.39
• C)$17.61
• D)$42.12

---

Definitions:

Late Payments

Payments made to a creditor after the due date has passed.

Compounded Semi-Annually

Interest calculation method where interest is added to the principal balance of an investment or loan twice a year, leading to interest on interest.

Amortized

The process of gradually paying off a debt over a period of time through regular payments.

Mortgage Loan

A loan secured by real property through the use of a mortgage note.