Powel Corporation Manufactures Numerous Products, One of Which Is Called

Essay

Powel Corporation manufactures numerous products, one of which is called Gamma54. The company has provided the following data about this product:
Required:
a. What net operating income is the company earning now on its sales of Gamma54?
b. Management is considering increasing the price of Gamma54 by 10%, from $16.00 to $17.60. The company's marketing managers estimate that this price hike would decrease unit sales by 15%, from 180,000 units to 153,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will Gamma54 earn at a price of $17.60 if this sales forecast is correct?
c. Assuming that the total traceable fixed expense does not change, if Powel increases the price of Gamma54 to $17.60, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $16.00? (Round your answer to the nearest one-tenth of a percent.)