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Should oriole implement the price reduction

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Reference no: EM132975700

Oriole Orthotics Company distributes a specialized ankle support that sells for $30. The company's variable costs are $20 per unit; fixed costs total $370,000 each year.

Last year, Oriole sold 42,000 ankle supports. The company's marketing manager is convinced that a 10% reduction in the sales price, combined with a $47,000 increase in advertising, will result in a 30% increase in sales volume over last year.

Problem 1: Compute the projected income.

Problem 2: Should Oriole implement the price reduction?

Reference no: EM132975700

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