Saved Help Save & Exit Su Thornbrough Corporation produces and sells a single pr

Question

Saved Help Save & Exit Su Thornbrough Corporation produces and sells a single product with the following characteristics: Percent of Unit $220 Per Selling price Variable expenses Contribution margin Sales 100% 20% 80% $176 The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month. The marketing manager would like to cut the selling price by S18 and increase the advertising budget by $53,000 per manager predicts that these two changes would increase monthly sales by 1,000 monthly net operating income of this change? units What should be the overall effect on the companys Multiple Choice decreose of $105,000 Prev 40125 ??? Next TOSHIBA

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Current Proposed Differential Sales Existing = 7000*220 Proposed= 8000*202           1,540,000.00           1,616,000.00              (76,000.00) Less Variable Costs Existing = 7000*44 Proposed = 8000*44            (308,000.00)            (352,000.00)                 44,000.00 Contribution Margin           1,232,000.00           1,264,000.00              (32,000.00) Fixed costs Existing = 901,000 Proposed = 901000+53000            (901,000.00)            (954,000.00)                 53,000.00 Net Operating Income              331,000.00              310,000.00                 21,000.00 Decrease of $21,000

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