Data concerning the single product that some company sells appear below: ...
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Accounting
Data concerning the single product that some company sells appear below:
| Per Unit | Percent of Sales | ||||||
| Selling price | $ | 120 | 100 | % | |||
| Variable expenses | 84 | 70 | % | ||||
| Contribution margin | 36 | 30 | % | ||||
Current monthly sales are 5,200 units. Fixed expenses are $150,000 per month. The people in the sales department have argued that if the monthly advertising budget is increased by $6,000 then monthly sales will increase by 200 units. You have been asked to determine the overall effect on the company's monthly net operating income if the sales department suggestion is carried out. Which of the following do you determine?
rev: 08_18_2016_QC_CS-57562
increase of $1,200
decrease of $6,000
increase of $7,200
decrease of $1,200
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