A Company produces 1,000 packs of chicken feed per month. Sales price is $4 per pack. Variable
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Question:
A Company produces 1,000 packs of chicken feed per month. Sales price is $4 per pack. Variable cost is $1.50 per unit, and fixed costs are $1,800 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will go up from $1.50 to $1.90 per unit, and fixed costs will go up by 20%. The company will price the new product at $5 per pack. How will this affect operating income?
A) Operating income will go down by $150 per month.
B) Operating income will remain unchanged.
C) Operating income will go down by $400 per month.
D) Operating income will go up by $240 per month.
Related Book For
Financial and Managerial Accounting
ISBN: 978-0538480895
11th Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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