Question
Cobble Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 160 100 %
Cobble Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit | Percent of Sales | ||||||||||
Selling price | $ | 160 | 100 | % | |||||||
Variable expenses | 48 | 30 | % | ||||||||
Contribution margin | $ | 112 | 70 | % | |||||||
Fixed expenses are $499,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $33,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 900 units. What should be the overall effect on the company's monthly net operating income of this change?
Multiple Choice
increase of $99,300
decrease of $56,100
decrease of $8,900
increase of $56,100
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