Answer the Following Questions Using the Information Below:
Contrafic Lighting

Multiple Choice

Answer the following questions using the information below:
Contrafic Lighting manufactures small flashlights and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units.
$$\begin{array} { l r r } & \text { Current } & \text { Projected } \\\text { Demand } & 75,000 \text { units } & 68,000 \text { units } \\\text { Selling price } & \$ 8.50 & \$ 9.25 \\\text { Incremental cost per unit } & \$ 4.80 & \$ 4.80\end{array}$$
-Would you recommend the 75-cent price increase?

A) No, because demand decreased.
B) No, because the selling price increases.
C) Yes, because contribution margin per unit increases.
D) Yes, because operating profits increase.