Question
Wrobbel Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 190 100% Variable
Wrobbel Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 190 100% Variable expenses 38 20% Contribution margin $ 152 80% Fixed expenses are $110,000 per month. The company is currently selling 1,400 units per month. Management is considering using a new component that would increase the unit variable cost by $48. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 600 units. Required: What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? (Negative amount should be indicated by a minus sign.)
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