This question is to be considered independently of all other questions relating to Robledo Corporation. Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $3. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change?

Question

Quizplus · Accepted Answer

The increase in sales revenue from selling 400 additional units should be compared to the increase in variable costs due to the new component. If the contribution margin per unit exceeds the $3 increase in variable cost, the net operating income will increase.

This Question Is to Be Considered Independently of All Other