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A company has provided the following cost, price, and sales data: Per Unit Selling price $ 228 Variable expenses 48 Contribution margin $ 180 The
A company has provided the following cost, price, and sales data:
Per Unit | ||||||||
Selling price | $ | 228 | ||||||
Variable expenses | 48 | |||||||
Contribution margin | $ | 180 | ||||||
The company is currently selling 6,800 units per month. Fixed expenses are $892,000 per month.
The marketing manager would like to cut the selling price by $22 and increase advertising spending by $42,000 per month. The marketing manager predicts that these changes would increase monthly sales quantity by 22%. What would be the overall effect on the company's monthly net operating income of this change?
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