A company has provided the following cost, price, and sales data: Selling price Variable expenses Per Unit $ Contribution margin $ 222 45 177 The company is currently selling 6,200 units per month. Fixed expenses are $898,000 per month. The marketing manager would like to cut the selling price by $19 and increase advertising spending by $33,000 per month. The marketing manager predicts that these changes would increase monthly sales quantity by 18%. What would be the overall effect on the company's monthly net operating income of this change? (Note: A POSITIVE number indicates an INCREASE in net operating income, and a NEGATIVE number indicates a DECREASE in net operating income)
A company has provided the following cost, price, and sales data: Selling price Variable expenses Per Unit $ Contribution margin $ 222 45 177 The company is currently selling 6,200 units per month. Fixed expenses are $898,000 per month. The marketing manager would like to cut the selling price by $19 and increase advertising spending by $33,000 per month. The marketing manager predicts that these changes would increase monthly sales quantity by 18%. What would be the overall effect on the company's monthly net operating income of this change? (Note: A POSITIVE number indicates an INCREASE in net operating income, and a NEGATIVE number indicates a DECREASE in net operating income)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2CE
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