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Minden Company

Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company's present selling price is $98 per unit, and variable expenses are $68 per unit. Fixed expenses are $833,700 per year. The present annual sales volume (at the $98 selling price) is 25,200 units.

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Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company's present selling price is $98 per unit, and variable expenses are $68 per unit. Fixed expenses are $833,700 per year. The present annual sales volume (at the $98 selling price) is 25,200 units.

Requirement 1:
What is the present yearly net operating income or loss? (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)

Sales (25,200 x $98) 2,469,600
Less: Variable expenses (25,200 x $68) 1,713,600
Total Contribution Margin ...

Solution Summary

This solution is comprised of a detailed explanation to answer what is the present yearly net operating income or loss.

$2.19