Robledo Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $625,000 per month. The company is currently selling 9,000 units per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Robledo 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 $3.Since the new component would increase the features of the company's product,the marketing manager predicts that monthly sales would increase by 400 units.What should be the overall effect on the company's monthly net operating income of this change?

Question

Quizplus · Accepted Answer

The increase in sales by 400 units will generate additional revenue, which should be compared against the increased cost due to the $3 rise in unit variable cost. The net effect is an increase in net operating income by $3,800.

Robledo Corporation Produces and Sells a Single Product