Sales of Granite City Products Inc. have been on a steady decline for the last 1

Question

Sales of Granite City Products Inc. have been on a steady decline for the last 12 months. A market research study conducted revealed that the product of Granite City Products Inc. can be sold only for $420 as opposed to the current market price charged of $520 per unit. Granite City Products Inc, has decided to revise its sales price to $420 The annual sales target volume of the product after price revision is 280 units. Granite City Products Inc. wants to earn 30% on its sales amount. What is the target operating income? OA. S82.320 O B. S35.280 C.$117.600 OD. $152.880

Explanation / Answer

Revised Sales Price is $420 per unit.

Profit margin is 30% on sales price.

Profit per unit= Sales Price* 30%

=$420*30%

= $126

Target Operating Income= Profit per unit*Annual Sales Target

= $126*280 units

=$35, 280

Answer B. $35,280

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