The marketing manager believes that a 12000 increase in the, Ask an Expert

Accounting

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

Per Unit Percent
of Sales
Selling price $ 150 100%
Variable expenses 60 40%
Contribution margin $ 90 60%

Fixed expenses are $355,000 per month. The company is currently selling 5,000 units per month.

The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 160 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M952237

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