Answer the Following Questions Using the Information Below:
Newcastle Enterprises

Multiple Choice

Answer the following questions using the information below:
Newcastle Enterprises reports the year-end information from 2018 as follows:
$\begin{array}{lr}\text { Sales (70 000 units) } & \$ 720000 \\\text { Cost of goods sold } & \underline{370000} \\& \\\text { Gross margin } & 350000 \\\text { Operating expenses } & \underline{200000} \\& \\\text { Operating profit } & \underline{ \$ 150000}\end{array}$
Newcastle is developing the 2019 budget.In 2019 the company would like to increase selling prices by 4%,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 Newcastle increase the selling price in 2019?

A) No,because sales volume decreases for 2019.
B) Yes,because operating profit is increased for 2019.
C) Yes,because sales revenue is increased for 2019.
D) No,because operating profit decreases for 2019.