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Sales (13,400 units at $40 per unit) $ 536,000
Variable expenses 268,000

Contribution margin 268,000
Fixed expenses 298,000

Net operating loss $ (30,000)
The sales manager feels that an $6,800 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $86,000 increase in monthly sales. If the sales manager is right, what will be the effect on the company's monthly net operating income or loss? (Use the incremental approach in preparing your answer.)

 

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