accounting help?!?!?!

Accounting
Tutor: None Selected Time limit: 1 Day

I am stuck on a problem we have to do for homework. 

A manufacturing company reports the following operating results for the month:

Sales $500,000 (units 5,000)

Variable costs $300,000

Fixed costs $180,000

They believe they can improve profits by increasing the sales price per unit by 10% even though this would result in a 10% decrease in sales volume (units). What would be the effect on net income if management does this? 

Jun 1st, 2015

This question is in progress and shall complete in 1 day, then check.


Jun 1st, 2015

As we know that, Sales are added in Profit and Loss account and have direct relation with net income.

Now as increase in sale price per unit is 10%= 110 per unit price, 

and decrease in sales volume per unit is 10%= 5000 x 10 = $50000

So,

A decrease in net income of $50000 shall be there.

Jun 1st, 2015

The answer choices we were provided with are: decrease by 2,000..... increase by 25,000...decrease by 35,000....increase by 50,000......

I keep coming up with 35,000 but i think that is wrong and you came up with a net income decrease of 50,000 and that is not one of our choices. Is there another way to work this?

Jun 2nd, 2015

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