Jensen Company has the following situation:
Sales Price: $40 per unit
Variable Cost Per Unit: $25 per unit
Fixed Costs: $20,000
Units Sold: 4,000
Jensen is considering lowering the price to $35 per unit which she believes would increase units sold to 4,750.
Required
• Calculate the net income under the current situation and then again with the changes.
• Should Jensen lower the price? Support your answer.
Current Net Income ____________________________________________
Net Income With Changes_______________________________________