Question
Wilson Company prepared the following preliminary budget assuming no advertising expenditures: Selling price...................... $10 per unit Unit sales........................... 100,000 Variable expenses.............. $600,000 Fixed expenses.................. $300,000
Wilson Company prepared the following preliminary budget assuming no advertising expenditures:
| Selling price...................... | $10 per unit |
| Unit sales........................... | 100,000 |
| Variable expenses.............. | $600,000 |
| Fixed expenses.................. | $300,000 |
Based on a market study, the company estimated that it could increase the unit selling price by 15% and increase the unit sales volume by 10% if $100,000 were spent on advertising. Assuming that these changes are incorporated in its budget, what should be the budgeted net operating income?
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