Alvarez Company is facing an $8 increase in the variable costs of producing one of its products for the upcoming year.As a result,the sales manager has made a proposal to increase the sales price of the product while increasing the advertising budget at the same time.The sales price increase will lower sales volume,but the other changes may help the company maintain its profit margin.Alvarez has provided the following information regarding the current year results and the proposal made by the sales manager:

Relative to the current year,the sales manager's proposal will ________.

Question

Alvarez Company is facing an $8 increase in the variable costs of producing one of its products for the upcoming year.As a result,the sales manager has made a proposal to increase the sales price of the product while increasing the advertising budget at the same time.The sales price increase will lower sales volume,but the other changes may help the company maintain its profit margin.Alvarez has provided the following information regarding the current year results and the proposal made by the sales manager:

Relative to the current year,the sales manager's proposal will ________.

Quizplus · Accepted Answer

D)
Evaluation of current year data:
 11ea86ed_2ba9_5520_8b27_6b80a81a090c_TB3056_00 Evaluation of proposal made by the sales manager:
 11ea86ed_2ba9_7c31_8b27_8bb9ff07b0e1_TB3056_00 Increase or (decrease)in operating income = $156,000 - $352,000 = (196,000)

Alvarez Company Is Facing an $8 Increase in the Variable