Question
Brace Corporation sells and produces one single product, a maple baseball bat. Data regarding the maple bats appear below: Per Unit Percent of Sales Selling
Brace Corporation sells and produces one single product, a maple baseball bat. Data regarding the maple bats appear below:
Per Unit | Percent of Sales | ||
Selling price | $ | 230 | 100% |
Variable expenses | 46 | 20% | |
Contribution margin | $ | 184 | 80% |
Brace's fixed expenses are $150,000 per month. They are currently selling 1,000 baseball bats per month. |
Brace's management is considering a new super-premium type of maple wood that would increase the unit variable cost by $80 per bat. Since the new maple wood would dramatically improve the company's product, the marketing manager predicts that monthly sales would increase by 700 units. |
Required: |
What should be the overall effect on Brace Corporation's company's monthly net operating income if the new maple wood is used and fixed expenses are unchanged? (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.) |
Change in net operating income | $ |
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