Kuzio Corporation produces and sells a single product. Data concerning that product appear below: Per UnitPercent of SalesSelling price$130 100%Variable expenses 78 60%Contribution margin$52 40% The company is currently selling 6,000 units per month. Fixed expenses are $263,000 per month. The marketing manager believes that a $5,000 increase in the monthly advertising budget would result in a 140 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 $7,280
B. increase of $2,280
C. decrease of $5,000
D. decrease of $2,280
Answer: B
You might also like to view...
Which of the following statements concerning compensating balance agreements is not true?
A) They always reduce the amount of cash available to the borrower. B) They always involve legal restrictions on the cash received. C) They always increase the effective interest rate to the borrower. D) They must be disclosed in the financial statements' footnotes.
Performance measurement is the use of both quantitative and qualitative tools to gauge an organization's performance in relation to a specific goal or an expected outcome
Indicate whether the statement is true or false
The design engineer's preliminary estimate of a product's design, production, and distribution costs is $1,550 per unit. Market research shows potential customers are willing to pay up to $1,989 for the product. If the desired profit is 40 percent of target cost, should the company make the product?
A) No, the market price only allows for a 28% profit at this cost. B) Yes, with only slight modifications to cost. C) Yes, the desired costs and profit are right on target. D) Yes, the market price will allow for a profit that exceeds the target.
Answer the following statements true (T) or false (F)
1. Placement describes where a product or service gets located in the marketplace. 2. According to the mutuality principle, marketers are obligated to sell products for the lowest price possible. 3. In the Robin Hood Effect, managers offer something extra to wronged employees. 4. All managers carry out some human resource functions. 5. Interactional justice is particularly important when selecting employees.