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Accounting

Cherry Street Market reported the following information for the sales of their only product, cherries sold by the pint:

Sales: Total = $31,500 (Per Unit = $4.50)
Variable expenses: Total = $9,450 (Per Unit = $1.35)
Contribution margin: Total = $22,050 (Per Unit = $3.15)
Total fixed expenses = $13,000
Net operating income = $9,050
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Cherry Street would like to increase their selling price by 50 cents per unit, and feel that this will decrease sales volume by 10%. Should Cherry Street increase the price, and what will the effect be on net operating income?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M973210

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