Question
Miltank Company produces and sells a single product. The unit selling price is 2,000 and the unit variable expenses is 800. Fixed expenses are 358,000
Miltank Company produces and sells a single product. The unit selling price is 2,000 and the unit variable expenses is 800. Fixed expenses are 358,000 per month. The company is currently selling 900 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of 160 per unit. In exchange, the sales staff would accept a decrease in their salaries of 112,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 110 units. The overall effect on the company's monthly net operating income of this strategy would be a change in net operating income (NOI) of ___________.
Indicate in your solution sheet if the change is an increase or a decrease
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