Question

Per Unit Percent of Sales Selling price $ 115 100 % Variable expenses 69 60 Contribution margin $ 46 40 % Fixed expenses are $83,000 per month and the company is selling 2,500 units per month. rev: 06_04_2020_QC_CS-205709, 06_18_2020_QC_CS-216765 Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,800 and monthly sales increase by $17,250

Answer 1

Net operating income will increase by $8,450 per month.

Step-by-step explanation:

Prepare a Incremental analysis to reflect the impact of the new circumstances.

Incremental analysis

Incremental Sales $17,250

Less Incremental Fixed Cost ($8,800)

Incremental Income $8,450

Conclusion :

Net operating income will increase by $8,450 per month.