3 Percent Per Unit of Sales 1008 Selling price Variable expenses Contribution ma
ID: 2343063 • Letter: 3
Question
3 Percent Per Unit of Sales 1008 Selling price Variable expenses Contribution margin S 90 63 $ 27 70 30% rt 1 of 2 Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. ints Required 1-a. The marketing manager argues that a $5,000 increase in the monthly advertising budget would increase monthly sales by $9,000. Calculate the increase or decrease in net operating income. 1-b. Should the advertising budget be increased? eBook Hint Print Complete this question by entering your answers in the tabs below References Req 1A Req 1B The marketing manager argues that a $5,000 increase in the monthly advertising budget would increase monthly sales by $9,000. Calculate the increase or decrease in net operating income.Explanation / Answer
3) Effect on net operating income = (9000*30%)-5000 = -2300
Net income decreases by -$2300
No, company should not increase advertising expense
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