Question
12. Wertman Corporation produces and sells a single product with the following characteristics: Selling Pice ............... $210 100% Variable expenses ......$126 60% Contribution margin..... $84
12. Wertman Corporation produces and sells a single product with the following characteristics:
Selling Pice ............... $210 100%
Variable expenses ......$126 60%
Contribution margin..... $84 40%
The company is currently selling 3,000 units per month. Fixed expenses are $215,000 per month. Consider each of the following questions independently.
The marketing manager would like to cut the selling price by $19 and increase the advertising budget by $14,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,000 units. What should be the overall effect on the company's monthly net operating income of this change?
A. increase of $177,000
B. increase of $51,000
C. decrease of $6,000
D. decrease of $51,000
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