Question
A company has provided the following cost, price, and sales data: Per Unit Selling price $ 222 Variable expenses 45 Contribution margin $ 177 The
A company has provided the following cost, price, and sales data:
| Per Unit | ||||||||
| Selling price | $ | 222 | ||||||
| Variable expenses | 45 | |||||||
| Contribution margin | $ | 177 | ||||||
The company is currently selling 6,200 units per month. Fixed expenses are $898,000 per month.
The marketing manager would like to cut the selling price by $19 and increase advertising spending by $33,000 per month. The marketing manager predicts that these changes would increase monthly sales quantity by 18%. What would be the overall effect on the company's monthly net operating income of this change?
(Note: A POSITIVE number indicates an INCREASE in net operating income, and a NEGATIVE number indicates a DECREASE in net operating income)
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Accounting and auditing research tools and strategies
Authors: Thomas Weirich, Thomas Pearson, Natalie Tatiana
8th edition
9781118806487, 1118027078, 1118806484, 978-1118027073
