Question
Data concerning Dorazio Corporation's single product appear below: Per UnitPercent of Sales Selling price$160100% Variable expenses4830% Contribution margin$11270% Fixed expenses are $87,000 per month. The
Data concerning Dorazio Corporation's single product appear below:
Per UnitPercent of Sales
Selling price$160100%
Variable expenses4830%
Contribution margin$11270%
Fixed expenses are $87,000 per month. The company is currently selling 1,000 units per month. Management is considering using a new component that would increase the unit variable cost by $28. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change?
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Accounting Information Systems
Authors: Pat Wheeler, Ulric J Gelinas, Richard B Dull
9th Edition
0538469315, 9780538469319
