Question - Ron ken, inc. makes and sells a single product. The current selling price is $35 per unit. Variable expenses are $21 per unit, and fixed expenses total $ 148,000.
a. Calculate the monthly operating income (or loss) at a monthly sales volume of 13,200 units.
b. Relative to all aforementioned information, calculate monthly operating (or loss) if a $5 per unit reduction in the selling price results in a sales volume increase by 25,000 units per month.
c. Now relative to the original information at the top of the page, assume that the firm implements a $3 per unit price increase and incurs a per month increase of $18,500 in advertising expenses. At a sales volume of 13,200 units, calculate the monthly operating income based on this new (part c) scenario.