Question
Calderon Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 300 100% Variable
Calderon Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit | Percent of Sales | ||
Selling price | $ | 300 | 100% |
Variable expenses | 48 | 16% | |
Contribution margin | $ | 252 | 84% |
Fixed expenses are $220,000 per month. The company is currently selling 1,700 units per month. |
Management is considering using a new component that would increase the unit variable cost by $61. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 500 units. |
Required: |
What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.) |
Change in net operating income | $ |
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