Buzby Corporation Manufactures Numerous Products, One of Which Is Called

Essay

Buzby Corporation manufactures numerous products, one of which is called Epsilon-39. The company has provided the following data about this product:
Required:a. Management is considering decreasing the price of Epsilon-39 by 5%, from $43.00 to $40.85. The company's marketing managers estimate that this price reduction would increase unit sales by 10%, from 90,000 units to 99,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will Epsilon-39 earn at a price of $40.85 if this sales forecast is correct?b. Assuming that the total traceable fixed expense does not change, how many units of Epsilon-39 would Buzby need to sell at a price of $40.85 to earn the same net operating income that it currently earns at a price of $43.00? (Round your answer up to the nearest whole number.)