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    Minden Company

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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.

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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

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