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.
The marketing manager believes that an $11,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. 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.
The marketing manager believes that an $11,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Quizplus · Accepted Answer

11eacbfc_c782_651a_8ffe_693b1fc0d7b1_TB7552_00 Overall net operating income will increase by $500

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