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Kuzio Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 130 100 %
Kuzio Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit | Percent of Sales | ||||||||||
Selling price | $ | 130 | 100 | % | |||||||
Variable expenses | 78 | 60 | % | ||||||||
Contribution margin | $ | 52 | 40 | % | |||||||
The company is currently selling 6,000 units per month. Fixed expenses are $263,000 per month. The marketing manager believes that a $5,000 increase in the monthly advertising budget would result in a 140 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
Multiple Choice
decrease of $5,000
increase of $7,280
increase of $2,280
decrease of $2,280
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