Thornbrough Corporation produces and sells a single product with the following characteristics:

Per Unit Percent of Sales

Selling price $220 100%

Variable expenses 44 20%

Contribution Margin $176 80%

The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month.

The marketing manager would like to cut the selling price by $18 and increase the advertising budget by $53,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1000 units. What should the overall effect on the companys monthly net operating income of this change?

24 Contribut ion sargin 51 76 The company is cusmevaly selling 7000 unis per month Fiwed expenses are S901000 per month month. The marketing manager predicts The marketing manager would ike to cut the seing pice by S and increase the advertsing budget by S53,000 er that these twicharges wouldincrease mortay sales by 1,000 unts what should be the overall eesect on the company s monthly ret operstingincome of this change? decrease of $105,000 incresse of $149.000