Mike's Motorcycles

The company's owner has seen some indications of a slowdown in sales after several years of business success. They decided to increase the advertising budget by 10% and reduce sales prices by 4%. The following partial income statement shows the company's results for the most recent quarter:

Sales$800,000.00

Less: Variable costs$560,000.00

Contribution Margin $240,000.00

Less Fixed costs$175, 000.00

Net Operating Income $65,000.00

If the advertising budget was $30,000 for the quarter and was included in the fixed costs, calculate the new net income or loss if the changes are made?

You should assume that the variable cost will not change if the implement the preceding changes.