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What the effect on company monthly net operating income

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Reference no: EM132202294

Question - Nice Corporation produces and sells a single product. Data concerning that product appear below:

Per Unit Percent of Sales Selling price $200 100% Variable expenses 40 20% Contribution margin $160 80%

Fixed expenses are $120,000 per month. The company is currently selling 1,300 units per month.

Required: Management is considering using a new component that would increase the unit variable cost by $49. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected?

Reference no: EM132202294

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