Robledo Corporation produces and sells a single product. Data concerning that product appear below:

Fixed expenses are $625,000 per month. The company is currently selling 9,000 units per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Robledo Corporation. Refer to the original data when answering this question. The marketing manager believes that a $7,000 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?

Answer

a.

Decrease of $1,000

b.

Decrease of $7,000

c.

Increase of $1,000

d.

Increase of $8,000