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Data concerning Lemelin Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 230 100 % Variable expenses 115 50 % Contribution
Data concerning Lemelin Corporation's single product appear below:
Per Unit | Percent of Sales | ||||||||||
Selling price | $ | 230 | 100 | % | |||||||
Variable expenses | 115 | 50 | % | ||||||||
Contribution margin | $ | 115 | 50 | % | |||||||
The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month.
Management is considering using a new component that would increase the unit variable cost by $2. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 300 units. What should be the overall effect on the company's monthly net operating income of this change?
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