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Estimate the pretax profit effect of the price change

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Reference no: EM132542277

Question - The accountants at French Perfumery decided to increase the price of a scent called Breezy by 11 %, from $ 6.42 per bottle to $7.13. French's accountants expect the 11 % price increase to reduce unit sales by 21 %. Current sales are 214,000 bottles, and total variable costs are $ 856,000.

Required - Estimate the pretax profit effect of the price change, assuming no effect on the variable cost rate, on total fixed costs, or on sales of other products.

Reference no: EM132542277

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