Question
22. Houpe Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price................. $140 100% Variable
22. Houpe Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit | Percent of Sales | ||
Selling price................. | $140 | 100% | |
Variable expenses........ | 42 | 30% | |
Contribution margin...... | $98 | 70% |
Fixed expenses are $490,000 per month. The company is currently selling 6,000 units per month. Consider each of the following questions independently. For questions 21 to 24 I need the amount of change and whether you consider it to be and increase or decrease to operating income.
Management is considering using a new component that would increase the unit variable cost by $6. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 250 units. What should be the overall effect (including the dollar amount) on the company's monthly net operating income of this change?
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