Cobble Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $499,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $33,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 900 units. What should be the overall effect on the company's monthly net operating income of this change?

Question

Cobble Corporation produces and sells a single product. Data concerning that product appear below:  Fixed expenses are $499,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $33,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 900 units. What should be the overall effect on the company's monthly net operating income of this change?

Quizplus · Accepted Answer

11eacbfc_c770_d880_8ffe_75a167c77678_TB7552_00 Net operating income decreases by $8,900.

Cobble Corporation Produces and Sells a Single Product