Question
Shelhorse Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 220 100 %
Shelhorse Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit
Percent of Sales
Selling price
$
220
100
%
Variable expenses
66
30
%
Contribution margin
$
154
70
%
Fixed expenses are $362,000 per month. The company is currently selling 5,700 units per month.
Required:
The marketing manager believes that a $19,000 increase in the monthly advertising budget would result in a 130 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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