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Question - Zeeb Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit Percent of Sales
Selling price $ 150 100%
Variable expenses 60 40%
Contribution margin $ 90 60%
Fixed expenses are $355,000 per month. The company is currently selling 5,000 units per month.
The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 160 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
Explain the application of the cost principle in determining the acquisition cost of plant assets.
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Our book distribution division sells to national bookstores. Our division allows for up to 25% of sales in returns. For the past 4 years, returns have averaged 20%. We record revenue based on revenue recognition when the right of return exists.
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