Data concerning Marchman Corporation\'s single product appear below: The company
ID: 2460037 • Letter: D
Question
Data concerning Marchman Corporation's single product appear below:
The company is currently selling 4,000 units per month. Fixed expenses are $166,000 per month. Consider each of the following questions independently.
This question is to be considered independently of all other questions relating to Marchman Corporation. Refer to the original data when answering this question.
The marketing manager believes that a $6,000 increase in the monthly advertising budget would result in a 130 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
options
decrease of $240
decrease of $6,000
increase of $240
increase of $6,240
Per Unit Percent of Sales Selling price $120 100% Variable expenses 72 60% Contribution margin $48 40%Explanation / Answer
Marchman Corporation Details Amt Unit contribution margin 48 Increase in monthly units of sales due to advertisement 130 Incremental Contribution Margin in The month 6,240 Increase in Advertising cost in a month 6,000 Increase in Net Operating Income per Month 240
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