Question
Kyo Corporation produces and sells a single product. Data concerning that product appear below: Sales $780,000 Variable Expenses 546,000 Contribution Margin $234,000 Fixed Expenses 180,000
Kyo Corporation produces and sells a single product. Data concerning that product appear below:
| Sales | $780,000 |
| Variable Expenses | 546,000 |
| Contribution Margin | $234,000 |
| Fixed Expenses | 180,000 |
| Net Operating Income | $ 54,000 |
The company is currently selling 6,000 units per month. The marketing manager believes that a $5,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
| a. | decrease of $1,100 | |
| b. | increase of $900 | |
| c. | increase of $8,000 | |
| d. | decrease of $4,100 |
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Financial Accounting
Authors: David Spiceland, Wayne Thomas, Don Herrmann
4th edition
1259307956, 978-1259307959
