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Naumann Corporation produces and sells a single product. Data concerning that product appear below: ...

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Accounting

Naumann Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit Percent of Sales
Selling price $ 210100%
Variable expenses 4220%
Contribution margin $ 16880%
Fixed expenses are $130,000 per month. The company is currently selling 1,200 units per month.
Required:
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 400 units. What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected?

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