Reference no: EM132502877

Question 1: The sales manager is convinced that a 11% reduction in the selling price, combined with a $67,000 increase in advertising, would increase this year's unit sales by 25%. If the sales manager is right, what would be this year's net operating income if his ideas are implemented?

Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows:

Sales$3,120,000

Variable expenses 1,560,000

Contribution margin 1,560,000

Fixed expenses 180,000

Net operating income$1,380,000