Question
19) Perry Corporation produces and sells a single product. Data for that product are: Sales price per unit $250 Variable cost per unit $130 Fixed
19) Perry Corporation produces and sells a single product. Data for that product are:
Sales price per unit $250
Variable cost per unit $130
Fixed expenses for the month $680,000
Currently selling 13,500 units
Upper management is considering using a biodegradable packaging which costs $11 more per unit but it produces less waste in the long run. Management plans to increase advertising by $8000 in the first month to advertise this new feature to their packaging. They believe that environmentally friendly people will switch to their product resulting in an increase in sales of 3500 units per month. What should be the overall effect on the company's monthly operating income in the first month if this change is implemented?
A) Increase of $225,000 B) Decrease of $225,000 C) Increase of $241,000 D) Decrease of $241,000
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