16. Zeeb Corporation produces and sells a single product. Data concerning that p
ID: 2377481 • Letter: 1
Question
16. Zeeb Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit
Percent
of Sales
Selling price
$ 150
100%
Variable expenses
60
40%
Contribution margin
$ 90
60%
Fixed expenses are $355,000 per month. The company is currently selling 5,000 units per month.
The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 160 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
Answer
Work
17. The contribution margin ratio of Thronson Corporation's only product is 69%. The company's monthly fixed expense is $455,400 and the company's monthly target profit is $41,400.
Determine the dollar sales to attain the company's target profit.
Answer
Work
Per Unit
Percent
of Sales
Selling price
$ 150
100%
Variable expenses
60
40%
Contribution margin
$ 90
60%
Explanation / Answer
16.
Answer
The overall effect on the company's monthly net operating income of this change should be increase in operating income by $ 2400
Work
= 160*90-12000 = $2400
17.
Answer
The dollar sales to attain the company's target profit = $ 720,000
Work
= (455400+41400)/69% = $720000
Answer
The overall effect on the company's monthly net operating income of this change should be increase in operating income by $ 2400
Work
= 160*90-12000 = $2400
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