Larita Corporation produces and sells a single product. Data concerning that pro

Question

Larita Corporation produces and sells a single product. Data concerning that product appear below Percent of Sales Per Unit S 180 100% Selling price Variable expenses Contribution margin 72 S 108 60% Fixed expenses are $347,000 per month. The company is currently selling 4,200 units per month The marketing manager believes that a $18,000 increase in the monthly advertising budget would result in a 160 unit increase in monthly sales. Required: What should be the overall effect on the company's monthly net operating income of this change? (Negative amount should be indicated by a minus sign.) Change in net operating income

Explanation / Answer

Note :

Hence, Change = 105,880 - $ 106,600

= - $ 720

Change in Net Operating Income - $ 720

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