Answer:
Effect on income= (2,400,000)
Explanation:
Giving the following information:
Current selling price= $380
New selling price= $360
Unitary cost= $320
Units sold= 150,000*1.1= 165,000
<u>We need to calculate the effect on income:</u>
Effect on income= contribution margin new sales - contribution margin old sales
Effect on income= 15,000*(360 - 320) - 150,000*(380-360)
Effect on income= (2,400,000)
<u>Prove:</u>
New income= 165,000*40= 6,600,000
Actual income= 150,000*(380-320)= 9,000,000
Difference= (2,400,000)
