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Analysis
Case 1 showcases the net effect of the decrease in selling prices. There is
selling prices. This is indicative of the firm’s sensitivity when it comes to its selling
prices.
Case 1 and Case 2 bring about a negative effect on the financials of the
changes in Case 1 and Case 2, will have the lowest net income. Of the net
change in net income of 52,000, majority of the change is cause by the changes
The comparative analysis of the operations of the business shows that the
firm has a higher income when the expenses are raised by 10% than when the
indication that the firm’s selling price has more impact than the operating
expenses. This is an advantage to the company since they cannot control how
much they need to pay annually, and that even if the entity did have control over
the expenses, it would only impact the operations minimally. The selling prices,
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however, are under the control of the company, which is an advantage since, as
For the Returns on Equity (ROE), the researchers have provided the ratios
with 2 decimal places in order to fully express the changes. For the first 3 years
of operations in Case 1 and the original scenario, the ROE is the same since
they will only be incurring expenses in the same amount. As shown in the
Comparative Analyses, Case 2 always has the highest return. This is another
proof of the fact that the Expenses have a far lesser impact on the operations
shows that of the various cases, Case 3 ends up the one with highest Breakeven
Point in Sales. While it may not initially reveal Operating Expenses having a
lesser impact than the Selling Prices, a deeper look into the composition of the
items will prove that a change in Selling Prices has much more impact on the