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Calculate the change in operating income for zippy gonzalez

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Zippy Gonzalez Scooters currently sells a single model of scooter for $270. It has costs of $230. A competitor is bringing a new competing scooter to market that will sell for $245. Management believes it must lower the price to $245 to compete in the market for scooters. Marketing manager believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Zippy Gonzalez's sales are currently 5200 scooters per year.

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Question 1: Calculate the change in operating income if the marketing manager is correct and the sales price is changed. Clearly indicate whether the change is an increase or a decrease. Show all working

Reference no: EM132568892

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