Question
Craylon Manufacturing produces a single product that sells for $120. Variable costs per unit equal $25. The company expects total fixed costs to be
Craylon Manufacturing produces a single product that sells for $120. Variable costs per unit equal $25. The company expects total fixed costs to be $65,000 for the next month at the projected sales level of 1,000 units. In an attempt to improve performance, management is considering a number of altermative actions. Each situation is to be evaluated separately. One alternative is to increase advertsing expenses by $10,000. What is the effect on operating income with the increase of advertising expenses? OA Operating income will increase by $10,000. OB. Operating income will increase by $20,000. OC. Operating income will decrease by $20,000. OD. Operating income will decrease by $10.000.
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