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5) A company produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 100 100
5) A company produces and sells a single product. Data concerning that product appear below:
Per Unit | Percent of Sales | ||||||||||
Selling price | $ | 100 | 100 | % | |||||||
Variable expenses | 30 | 30 | % | ||||||||
Contribution margin | $ | 70 | 70 | % | |||||||
Fixed expenses are $356,000 per month. The company is currently selling 5,100 units per month.
Required:
The marketing manager believes that a $13,000 increase in the monthly advertising budget would result in a 250 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
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