Question
Umber, Inc., produces memory enhancement kits for scanners. Sales have been very erratic, with some months showing a profit and some months showing a loss.
Umber, Inc., produces memory enhancement kits for scanners. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below:
Sales (13,400 units at $20 per unit) $ 268,000 Variable expenses $ 160,800 Fixed expenses $ 89,000 Net operating income $ 18,200
The president is convinced that a 10% reduction in the selling price, combined with an increase of $35,000 in the monthly advertising budget, will double unit sales. What will be the new net operating income (loss) if these changes are adopted?
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