Riven Corporation Has a Single Product Whose Selling Price Is

Riven Corporation has a single product whose selling price is $10. At an expected sales level of $1,000,000, the company's variable expenses are $600,000 and its fixed expenses are $300,000. The marketing manager has recommended that the selling price be increased by 20%, with an expected decrease of only 10% in unit sales. What would be the company's net operating income if the marketing manager's recommendation is adopted?

A) $132,000
B) $290,000
C) $180,000
D) $240,000

Correct Answer:

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