Problem
Brooms Brujita Inc. Sells brooms During the last year, produced and sold 40,000 brooms. $ 1.20 per broom. The variable cost per unit was $ 0.45 and the total fixed cost was $ 150,000. If Brujitas wants to increase the price per broom to $ 1.50, and understands that its sales will be reduced by 36,000 brooms a year.
Required
Prepare an incremental analysis.
Clearly present incremental revenue, incremental costs, and incremental benefits.
Should the Brujitas raise its price?