14. A company distributes a product that sells for S50 per unit. Variable expenses are $10 per unit, and fixed expenses total $15,000 annually. Assume that the company sold 4,000 units last year. The sales manager is convinced that a 10% reduction in the selling price, combined with a $30,000 increase in advertising expenditures, would increase annual unit sales by 50%. If these changes were made, by how much would net operating income increase or decrease? a. b. c. d. e. $20,000 increase $16,000 increase $12,000 decrease $10,000 decrease None of the above 15. A company produces toys. The following information is available: Selling price per doll $26.40 Variable costs per doll $12.00 Current annual sales Current fixed costs 80,000 units S360,000 The sales manager projects that next year a 10% reduction in selling price, combined with an increase of $50,000 in advertising spending would result in an increase of 50% in unit sales. By how much will net income increase if they do so? a. $166,000 b. $157,000 c. $187,600 d. $145,000 e. $209,200 16. A company uses direct labor-hours as the allocation base in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 1,500 hours and the total estimated manufacturing overhead was S30,000. At the end of the year, actual direct labor-hours for the year were 1,300 hours and the actual manufacturing overhead for the yearwas $29,000. What is the amount of overapplied or underapplied manufacturing overhead for the year? A. S3,000 underapplied B. S1,000 overapplied C. S5,000 underapplied D. $3,000 overapplied E. None of the above