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Business, 23.04.2021 01:00 andrwisawesome0

One of Ajax Company's products has a unit contribution margin of $25. Currently, the company produces and sells an average of 103,600 units of this product annually, from which it consistently generates an operating income of $2.5 million. Competition is increasing, and the company's brand manager anticipates that annual sales will level-off at 100,000 units in the years ahead. Her goal is to increase the product's annual operating income by 16.4%, to $2.91 million per year. Her strategy for achieving this goal is to change suppliers, which will reduce direct material costs by $2 per unit. She also intends to increase the product's selling price slightly to make it more comparable to the pricing of its competitors. Based on this information, if the product's annual fixed costs remain unchanged at $90,000, the brand manager estimates that the current selling price should be increased by $ .

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