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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% Variable

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 $184,000 per month. The marketing manager believes that a $5,800 increase in the monthly advertising budget would result in a 200 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 $5,800

  • increase of $4,600

  • increase of $10,400

  • decrease of $4,600

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