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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.

  1. Current Net Income ____________________________________________
  2. Net Income With Changes_______________________________________

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9796793

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