the inlormation below: Silicon Technologies, carrently sells 17\" monitors for $
ID: 2594781 • Letter: T
Question
the inlormation below: Silicon Technologies, carrently sells 17" monitors for $220. It has costs of $210. A compstit sell for $230. Management belioves it must price will cause sales to increase by 10%, even with a nine competitor in the toe is bringing a new 17 oenint to market that will lower the price to $230 to compete in the market for 17 smanitors Silicon believes thuai the ne per year market, Silicon's sales are currently 5,000 mentos operating income if marketing manager is correct and omly the sales price is changed? $200,000 $190,000 $(190,000) $(200,000)Explanation / Answer
Solution: $(190,000)
Working:
Operating income with selling price of $270 = 5,000 * ($270 - $210) = 300,000
Operating income with new selling price of $210 = 5,500 * ($230 - $210) = $110,000
Therefore, Silicon's operating income will decline by $190,000 (=$300,000 - $110,000).
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