Fixed expenses are $79,000 per month and the company is selling 3,600 units per month.

A. The marketing manager argues that a $8,400 increase in the monthly advertising budget would increase monthly sales by $17,000. Calculate the increase or decrease in net operating income.

Should the advertising budget be increased?

B. Management is considering using higher-quality components that would increase the variable expense by $3 per unit. The marketing manager believes that the higher-quality product would increase sales by 10% per month. Calculate the change in total contribution margin.

Should the higher-quality components be used?

C. Lin Corporation has a single product whose selling price is $130 per unit and whose variable expense is $65 per unit. The companys monthly fixed expense is $32,150. Calculate the unit sales needed to attain a target profit of $2,300.

- Calculate the dollar sales needed to attain a target profit of $8,900

Per Unit $ 95 57 $ 38 Percent of SaleS 100% 60 40% Selling price Variable expenses Contribution margin