Data concerning Cavaluzzi Corporation's single product appear below: Per UnitPercent of SalesSelling price$110 100%Variable expenses 44 40%Contribution margin$66 60%Fixed expenses are $440,000 per month. The company is currently selling 8,000 units per month.Required: The marketing manager believes that an $8,000 increase in the monthly advertising budget would result in a 150 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
What will be an ideal response?
| Increase in total contribution margin ($66 per unit × 150 units) | $ | 9,900 |
| Less incremental fixed expenses | 8,000 | |
| Change in net operating income | $ | 1,900 |
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