Spach Corporation manufactures numerous products, one of which is called Beta68. The company has provided the following data about this product:    Unit sales (a) 110,000 Selling price per unit$16.00 Variable cost per unit 10.00 Contribution margin per unit (b)$6.00 Total contribution margin (a) × (b)$660,000 Traceable fixed expense 580,000 Net operating income$80,000 ?Management is considering decreasing the price of Beta68 by 5%, from$16.00 to $15.20. The company's marketing managers estimate that this price reduction would increase unit sales by 10%, from 110,000 units to 121,000 units. Assuming that the total traceable fixed expense does not change, what net operating income will product Beta68 earn at a price of $15.20 if this sales forecast is correct? 

A. ($8,000)
B. $572,000
C. $49,200
D. $629,200


Answer: C

Business

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