Question
Calderon Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 200 100% Variable
Calderon Corporation produces and sells a single product. Data concerning that product appear below: |
Per Unit | Percent of Sales | ||
Selling price | $ | 200 | 100% |
Variable expenses | 42 | 21% | |
Contribution margin | $ | 158 | 79% |
Fixed expenses are $120,000 per month. The company is currently selling 1,100 units per month. |
Management is considering using a new component that would increase the unit variable cost by $40. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 300 units. |
Required: |
What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)
|
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