Ask Question
4 September, 20:26

uzio Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 130 100 % Variable expenses 78 60 % Contribution margin $ 52 40 % The company is currently selling 6,000 units per month. Fixed expenses are $263,000 per month. The marketing manager believes that a $5,000 increase in the monthly advertising budget would result in a 140 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change

+4
Answers (1)
  1. 5 September, 00:16
    0
    Result : Incremental profit of $2,280

    Explanation:

    Consider the incremental costs and revenues resulting from the $5,000 increase in the monthly advertising budget.

    Analysis of incremental costs and revenue

    Sales (140*$ 130) 18,200

    Less Variable expenses (140*$ 78) (10,920)

    Contribution 7,280

    Less Fixed Costs

    Advertising (5,000)

    Net Operating Income / (Loss) 2,280

    Result : Incremental profit of $2,280
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “uzio Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers