Answer the Following Questions Using the Information Below

Multiple Choice

Answer the following questions using the information below:
Kramer Enterprises reports year-end information from 2010 as follows:
Kramer is developing the 2011 budget. In 2011 the company would like to increase selling prices by 8%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost.
-Should Kramer increase the selling price in 2011?

A) Yes, because operating income is increased for 2011.
B) Yes, because sales revenue is increased for 2011.
C) No, because sales volume decreases for 2011.
D) No, because gross margin decreases for 2011.