This question is to be considered independently of all other questions relating to Bohlen Corporation. Refer to the original data when answering this question.
-The marketing manager believes that a $20,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $5,920
B)increase of $5,920
C)decrease of $20,000
D)increase of $25,920

Question

Quizplus · Accepted Answer

The increase in sales would generate additional revenue, which should be compared to the increase in advertising costs. If the contribution margin per unit is greater than the increase in advertising costs, the net operating income will increase.

This Question Is to Be Considered Independently of All Other