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6 Melville Inc. produces memory enhancement kits for scanner machines. The company's contribution format income statement for the most recent month is given below: Sales
6 Melville Inc. produces memory enhancement kits for scanner machines. The company's contribution format income statement for the most recent month is given below: Sales (13,500 units at $20 per unit) $ 270,000 Variable expenses 189,000 Contribution margin 81,000 Fixed expenses 90,000 Net operating loss $ 9,000) The president is convinced that a 10% reduction in the selling price, combined with an increase of $32,000 in the monthly advertising budget, will cause unit sales to double. How would the company's net operating income change if these strategies are adopted? A. Increase by $5,000 B. Decrease by $5.000 C. Increase by $14,000 D. Decrease by $14.000 E. None of the above
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