Ajax Corporation Is Performing a Sensitivity Analysis on One of Its

Multiple Choice

Ajax Corporation is performing a sensitivity analysis on one of its product.The product currently sells for $210 per unit, with variable cost of $90 per unit and fixed costs of $400,000.Ajax currently sells 12,000 units of this product.Ajax is considering raising its price by 15%.If prices increase, then it is expected that units sold will decrease by 10%.Calculate the change in operating income.

A) $196,200 decrease
B) $248,500 decrease
C) $196,200 increase
D) $248,500 increase