Kuzio corporation produces and sells a single product. data concerning that product appear below:
per unit percent of sales
selling price $220 100%
variable expenses 88 40%
contribution margin $132 60%
the company is currently selling 6,500 units per month. fixed expenses are $183,000 per month. the marketing manager believes that an $6,400 increase in the monthly advertising budget would result in a 140 unit increase in monthly sales. what should be the overall effect on the company's monthly net operating income of this change?

company's monthly net operating income will increase by $ 18480

Explanation:

Given:

case (1)

Number of units sold = 6500

Contribution margin per unit =  $ 132

thus, total contribution = 6500 × $ 132 = $ 858000

Fixed expenses per month = $183,000

therefore,

Net profit = total contribution - Fixed expenses per month

or

Net profit = $ 858000 - $183,000 = $ 675000

now, for the case (2)

Number of units sold = 6500 + 140 = 6640

Contribution margin per unit =  $ 132

thus, total contribution = 6640 × $ 132 = $ 876480

Fixed expenses per month = $183,000

therefore,

Net profit = total contribution - Fixed expenses per month

or

Net profit = $ 876480 - $183,000 = $ 693480

Increase in the net profit = $ 693480 - $ 675000 = $ 18480

hence,

the company's monthly net operating income will increase by $ 18480

employers prefer to hire ingenious, resourceful people because ingenious people may be more liable to engage in unethical deportment as they can cerebrate outside of the box

the answer is a.

by: nicholas dooley