Alpha company has provided the following data: Sales 12,000 units Sales price $100 per unit Variable cost $60 per unit Fixed cost $300,000 Management believes that if the selling price were decreased by $10 per unit and an additional $20,000 were spent on advertising that the sales would increase by 45%

Management Oct 07, 2020

Alpha company has provided the following data:

Sales

12,000 units

Sales price

$100 per unit

Variable cost

$60 per unit

Fixed cost

$300,000

Management believes that if the selling price were decreased by $10 per unit and an additional $20,000 were spent on advertising that the sales would increase by 45%. What would the change in net income be? Should Alpha go forward with the reduced selling price and new advertising campaign?