Cherry Street Market reported the following information for the sales of their only product, cherries sold by the pint:
Total Per Unit
Sales $31,500 $4.50
Variable expenses 9,450 1.35
Contribution margin 22,050 $3.15
Fixed expenses 13,000
Net operating income $ 9,050
Cherry Street would like to increase their selling price by 50 cents per unit, and feel that this will decrease sales volume by 10%. Should Cherry Street increase the price, and what will the effect be on net operating income?
A) Yes; $3,500 increase
B) Yes; $945 increase
C) No; no change
D) No; $945 decrease
