Analyzing Operational Changes

Operating results for department B of Delta Company during 2019 are as follows:

Sales $540,000

Cost of goods sold 378,000

Gross profit 162,000

Direct expenses 120,000

Common expenses 66,000

Total expenses 186,000

Net loss $(24,000)

If department B could maintain the same physical volume of product sold while raising selling prices an average of 5% and making an additional advertising expenditure of $30,000, what would be the effect on the departments net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 5%, the effect on net income (loss) would be $Answer