sales $400,000

variable costs $250,000

fixed costs $50,000

expexted production and sales in units 4000

The sales manager believes sales could be increased by 200 units if advertising expenditures were increased by $15,000. If advertising expenditures are increased and sales increse by 200 units, the effect on operating income will be a(n)

1) decrease of $7,500

2) increase of $7,500