Question
Per Unit Percent of Sales Selling price $ 150 100 % Variable expenses 90 60 % Contribution margin $ 60 40 % The company is
| Per Unit | Percent of Sales | ||||||||||
| Selling price | $ | 150 | 100 | % | |||||||
| Variable expenses | 90 | 60 | % | ||||||||
| Contribution margin | $ | 60 | 40 | % | |||||||
The company is currently selling 6,500 units per month. Fixed expenses are $193,000 per month. The marketing manager believes that a $5,400 increase in the monthly advertising budget would result in a 120 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
rev: 03_09_2018_QC_CS-121313
Multiple Choice
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increase of $7,200
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decrease of $5,400
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decrease of $1,800
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increase of $1,800
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Accounting for Governmental and Nonprofit Entities
Authors: Jacqueline L. Reck, James E. Rooks, Suzanne Lowensohn, Daniel Neely
18th edition
1260190080, 1260190083, 978-1259917059
