Ajax Corporation is performing a sensitivity analysis on one of its product. The product currently sells for $210 per unit, with variable cost of $90 per unit and fixed costs of $400,000. Ajax currently sells 12,000 units of this product. Ajax is considering raising its price by 15%. If prices increase, then it is expected that units sold will decrease by 10%. Calculate the change in operating income.
A) $196,200 decrease
B) $248,500 increase
C) $248,500 decrease
D) $196,200 increase
Answer: D) $196,200 increase
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What will be an ideal response?
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