Shelhorse Corporation produces and sells a single product. Data concerning that product appear below:
Fixed expenses are $343,000 per month. The company is currently selling 3,800 units per month.
Required:
The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 120 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Question

Shelhorse Corporation produces and sells a single product. Data concerning that product appear below:
  Fixed expenses are $343,000 per month. The company is currently selling 3,800 units per month.
Required:
The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 120 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

The Answer of Shelhorse Corporation produces and sells a single product. Data concerning that product appear below:
  Fixed expenses are $343,000 per month. The company is currently selling 3,800 units per month.
Required:
The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 120 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Shelhorse Corporation Produces and Sells a Single Product