Data concerning Lemelin Corporation's single product appear below: The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month.
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 200 units. What should be the overall effect on the company's monthly net operating income of this change?

Question

Data concerning Lemelin Corporation's single product appear below:  The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month.
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 200 units. What should be the overall effect on the company's monthly net operating income of this change?

Quizplus · Accepted Answer

11eacbfc_c782_16f8_8ffe_c9f9e39b796a_TB7552_00 Overall net operating income will increase by $1,400

Data Concerning Lemelin Corporation's Single Product Appear Below: the Company