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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
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increase of $10,400
-
decrease of $4,600
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