Eastwood Corporation manufactures numerous products, one of which is called Beta-96. The company has provided the following data about this product:
| Unit sales (a) | 52,000 | ||
| Selling price per unit | $ | 76.00 | |
| Variable cost per unit | $ | 46.00 | |
| Traceable fixed expense | $ | 1,406,024 | |
Management is considering decreasing the price of Beta-96 by 6%, from $76.00 to $71.44. The company’s marketing managers estimate that this price reduction would increase unit sales by 5%, from 52,000 units to 54,600 units. Assuming that the total traceable fixed expense does not change, what net operating income will product Beta-96 earn at a price of $71.44 if this sales forecast is correct?
Multiple Choice
$1,322,880
$(17,000)
$(83,144)
$1,389,024
