Answer:
a)647,000
b)658,000 yes as increase net income
c) 2,480,000
Explanation:
a) current net income : 842,000
less 13,000 x 12 increce in variable manufacturing (156,000)
less increase in fixed MO <u> (39,000) </u>
647,000
b)
Sales 3,200,000 (16,000 x 200)
Variable <u> (1,408,000)</u> 988,000x16,000/13,000 + 156,000
Contribution 1,792,000
Fixed MO (819,000)
Fixed S&A<u> (315,000) </u>
Net Income 658,000
c)
1,792,000 / 3,200,000 = 0.56
Answer:
a. 21 percent
b. -20 percent
c. -8 percent
d. -8 percent
Explanation:
Own price elasticity = -3
Income elasticity = -2
Advertising elasticity= 4
Cross price elasticity = -2
Formula for elasticity is given by,
a. When price of good X decreases by 7 percent.
Thus, as price decreases by 7% quantity rises by 21%.
b. The price of good Y increases by 10 percent.
Thus, as price of good Y increases by 10 percent, demand for good X falls by 20 percent.
c. Advertising decreases by 2 percent.
Thus, a 2 percent decline in advertising will lead to a 8 percent fall in quantity of good X.
d. Income increases by 4 percent.
Thus, when income increases by 4 percent, quantity decreases by 8 percent.