Maccarone Corporation Manufactures Numerous Products, One of Which Is Called

Essay

Maccarone Corporation manufactures numerous products, one of which is called Tau10. 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 Tau10?
b. Management is considering decreasing the price of Tau10 by 5%, from $36.00 to $34.20. The company's marketing managers estimate that this price reduction would increase unit sales by 10%, from 130,000 units to 143,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will Tau10 earn at a price of $34.20 if this sales forecast is correct?
c. Assuming that the total traceable fixed expense does not change, if Maccarone decreases the price of Tau10 to $34.20, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $36.00? (Round your answer to the nearest one-tenth of a percent.)