The production manager has indicated that unit variable costs will be increasing by $10\%.$ In an effort to protect profits, the sales manager suggested increasing the selling price by $10\%$ as well. However, an analyst thinks a $10\%$ increase in price will result in a $5\%$ decrease in sales volume. If all these things occur, how much will operating income change?

 

Answer rating: 100% (QA)

Increasing the selling price by 10 to offset a 10 increase in variable cost sounds like a good strat... View the full answer