The company is currently selling 7000 units per month., Ask an Expert

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Ringstaff Corporation produces and sells a single product. Data concerning that product appear below:

per unit percent of sales
selling price............... $150 100%
variable expenses........... 30 20%

contribution margin......... $120 80%

The company is currently selling 7,000 units per month. Fixed expenses are $615,000 per month. The marketing manager believes that a $21,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

a. decrease of $21,000

b. decrease of $600

c. increase of $600

d. increase of $21,600

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M982413

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