The EV39432 company has provided the following cost, price, and sales data: Per Unit Selling price $4 230 Variable expenses 49 Contribution 24 181 margin The EV39432 company is currently selling 7,000 units per month. Fixed expenses are $890,000 per month. The marketing manager would like to cut the selling price by $23 and increase advertising spending by $45,000 per month. The marketing manager predicts that these changes would increase monthly sales quantity by 18%. What would be the overall effect on the EV39432 company's monthly net operating income of this change?
The EV39432 company has provided the following cost, price, and sales data: Per Unit Selling price $4 230 Variable expenses 49 Contribution 24 181 margin The EV39432 company is currently selling 7,000 units per month. Fixed expenses are $890,000 per month. The marketing manager would like to cut the selling price by $23 and increase advertising spending by $45,000 per month. The marketing manager predicts that these changes would increase monthly sales quantity by 18%. What would be the overall effect on the EV39432 company's monthly net operating income of this change?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 11MCQ: Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett...
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The EV39432 company has provided the following cost, price, and sales data:
Per Unit
Selling price
2$
230
Variable expenses
49
Contribution
24
181
margin
The EV39432 company is currently selling 7,000 units per month. Fixed expenses are $890,000 per month.
The marketing manager would like to cut the selling price by $23 and increase advertising spending by $45,000 per month. The
marketing manager predicts that these changes would increase monthly sales quantity by 18%. What would be the overall effect on
the EV39432 company's monthly net operating income of this change?
(Note: A POSITIVE number indicates an INCREASE in net operating income, and a NEGATIVE number indic
a DECREASE in net
operating income)
Multiple Choice
-6,920 dollars
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