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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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