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Naumann Corporation produces and sells a single product. Data concerning that product appear below: Selling price Variable expenses Contribution margin Percent of Per Unit
Naumann Corporation produces and sells a single product. Data concerning that product appear below: Selling price Variable expenses Contribution margin Percent of Per Unit ' Sales $ 220 33 100% 15% $ 187 85% Fixed expenses are $140,000 per month. The company is currently selling 1,100 units per month. Required: Management is considering using a new component that would increase the unit variable cost by $42. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 300 units. What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? Note: Negative amounts should be indicated by a minus sign. Change in net operating income
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