Mike's Motorcycles has enjoyed several years of business success, but recently the company has seen some indications of a slowdown in sales. The company's owner has decided to increase the advertising budget by 10% and reduce sales prices by 4%. The following partial income statement shows the company's results for the most recent quarter:
Partial Income Statement
Sales......................$800,000
Less: ..................VC 560,000
CM: ........................ 240,000
Less: ...................FC 175,000
= Net Operating $65,000
Assuming that the original advertising budget was $30,000 for the quarter and was included in the fixed costs, calculate Mike's Motorcycles' new net income or loss if the changes are made. You should assume that the variable costs will not change if Mike implements the preceding changes.
Net operating Income = $?