This question is to be considered independently of all other questions relating to Boenisch Corporation. Refer to the original data when answering this question.

-The marketing manager believes that a $10,000 increase in the monthly advertising budget would result in a 170 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $1,560
B)increase of $11,560
C)decrease of $1,560
D)decrease of $10,000

Question

This question is to be considered independently of all other questions relating to Boenisch Corporation. Refer to the original data when answering this question.

-The marketing manager believes that a $10,000 increase in the monthly advertising budget would result in a 170 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $1,560
B)increase of $11,560
C)decrease of $1,560
D)decrease of $10,000

Quizplus · Accepted Answer

The increase in sales would generate additional contribution margin, but the $10,000 increase in advertising is a fixed cost. The net effect is an increase of $1,560 in net operating income.

This Question Is to Be Considered Independently of All Other