Houpe Corporation produces and sells a single product. Data concerning that product appear below:
Fixed expenses are $490,000 per month. The company is currently selling 6,000 units per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Houpe Corporation.Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $5.Since the new component would increase the features of the company's product,the marketing manager predicts that monthly sales would increase by 300 units.What should be the overall effect on the company's monthly net operating income of this change?
A) decrease of $2,100
B) decrease of $27,900
C) increase of $2,100
D) increase of $27,900

Question

Houpe Corporation produces and sells a single product. Data concerning that product appear below:
  Fixed expenses are $490,000 per month. The company is currently selling 6,000 units per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Houpe Corporation.Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $5.Since the new component would increase the features of the company's product,the marketing manager predicts that monthly sales would increase by 300 units.What should be the overall effect on the company's monthly net operating income of this change?
A) decrease of $2,100 
B) decrease of $27,900 
C) increase of $2,100 
D) increase of $27,900

Quizplus · Accepted Answer

11ea7761_1870_0943_81a5_cd17a53d6ea8_TB2580_00 Overall net operating income will decrease by $2,100

Houpe Corporation Produces and Sells a Single Product