Shelhorse Corporation produces and sells a single product. Data concerning that

Question

Shelhorse Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 260 100 % Variable expenses 91 35 % Contribution margin $ 169 65 % Fixed expenses are $366,000 per month. The company is currently selling 6,100 units per month. Required: The marketing manager believes that a $23,000 increase in the monthly advertising budget would result in a 150 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Explanation / Answer

Increase in contribution margin 25350 =150*169 Less: Increase in the monthly advertising 23000 Net operating income change 2350 Net operating income increases by $2350

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.