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Calculate the increase or decrease in net operating income

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Reference no: EM131802596

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.

Required:

1-a. The marketing manager believes that an $8,800 increase in the monthly advertising budget would increase monthly sales by $19,000. Calculate the increase or decrease in net operating income.

Refer to the original data. Management is considering using higher-quality components that would increase the variable cost by $5 per unit. The marketing manager believes that the higher-quality product would increase sales by 15% per month. Calculate the change in total contribution margin.

Reference no: EM131802596

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