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 OB. $35.280 O c. $117,600 D. $152.880

Explanation / Answer

Answer:-The target operating income is $35280 (option B).

Explanation:- Revised selling price = $420 per unit

Sales target volume of the product =280 units

Desired income of Granite City Products Inc. =30% of sales amount

Sales amount =$420 per unit*280 units

                      =$117600

Target operating income =$117600*30% =$35280

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