Shelhorse Corporation produces and sells a single product. Data concerning that product appear below: Per UnitPercent of
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Question:
Shelhorse Corporation produces and sells a single product. Data concerning that product appear below:
Per UnitPercent of SalesSelling price$100100%Variable expenses3030%Contribution margin$7070%
Fixed expenses are $356,000 per month. The company is currently selling 5,100 units per month.
Required:
The marketing manager believes that a $13,000 increase in the monthly advertising budget would result in a 250 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
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