Shelhorse Corporation produces and sells a single product. Data concerning that product appear below: Per UnitPercent of SalesSelling price$140 100%Variable expenses 56 40%Contribution margin$84 60%Fixed expenses are $275,000 per month. The company is currently selling 4,000 units per month.Required:The marketing manager believes that a $13,000 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 ($84 per unit × 150 units) | $ | 12,600 | |
| Less incremental fixed expenses | 13,000 | ||
| Change in net operating income | $ | (400 | ) |
You might also like to view...
The primary difference between positive and negative confirmations used in the audit of accounts receivable is which of the following?
a. The mode of response. b. The amount of information included. c. The control of the confirmation process by the auditor. d. The method in which accounts are selected for confirmation.
When a marketing manager decides to run a quarter-page ad in the business section of the local newspaper to promote goodwill toward his company, he is executing part of a tactical plan
Indicate whether the statement is true or false
What is the most likely explanation for this difference?
A) The prospects the team worked with in the fourth quarter had maximized their budgets. B) The manager didn't adequately train the team in how to conduct fourth-quarter sales. C) Pending sales are the only sales that were tallied in the final figures for each quarter. D) The team neglected the pipeline and prospect development. E) The team failed to align the selling and buying process.
Organizational climate is:
a. another term for culture. b. the environment in which the business competes. c. the observable manifestation of culture. d. most valuable when it is outward looking. e. the foundation for innovation.