Question
Titanic Roofing Company has estimated the following amounts for its next fiscal year: Total fixed costs $900,000 Sale price per unit 40 Variable cost per
Titanic Roofing Company has estimated the following amounts for its next fiscal year:
Total fixed costs | $900,000 |
Sale price per unit | 40 |
Variable cost per unit | 25 |
If the company spends an additional $35,000 on advertising, sales volume would increase by 3,000units. Before the change, the company's sales level exceeds the breakeven point. What effect will this decision have on the operating income of Titanic?
A. Operating income will increase by $45,000
B. Operating income will increase by $10,000
C. Operating income will increase by $120,000
D. Operating income will decrease by $10,000
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