Thornbrough Corporation produces and sells a single product with the following characteristics: The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month.
The marketing manager believes that a $28,000 increase in the monthly advertising budget would result in a 190 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Question

Thornbrough Corporation produces and sells a single product with the following characteristics:  The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month.
The marketing manager believes that a $28,000 increase in the monthly advertising budget would result in a 190 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_c783_7692_8ffe_e7c9a9b36939_TB7552_00 Overall net operating income will increase by $5,440

Thornbrough Corporation Produces and Sells a Single Product with the Following