Samsuni Makes Wireless Earbuds

Essay

Samsuni makes wireless earbuds. The prior-year, unit selling price for a set of earbuds was $100 with a unit variable cost of $40 and a unit fixed cost of $10 based on production and sales of 5,000 sets. For the current year, Samsuni is planning to increase the unit selling price to $105 since the unit variable cost increased by 20% and the total fixed cost also increased by 10%. Assume that at the higher selling price, the company feels that unit sales may decrease to 4,500 sets. What operating income will Samsuni expect to recognize for the current year?