O'Neill, Incorporated's income statement for the most recent month is given below. The marketing department believes that a promotional campaign at Store A costing $5,000 will increase sales by $15,000. If its plan is adopted, overall company net operating income should: Select one: a. decrease by $800 b. decrease by $5,800 c. increase by $5,800 d. increase by $10,000

$1,800

Explanation:

Here Decrease or increase can be calculated as under:

Increase in Revenue                                                           $15,000

Increase in Variable Cost (72k / 100k * $15,000)             ($10,800)

Increase in Promotional Cost                                            ($6,000)  

Net Operating Income Decrease                                        ($1,800)

Hence the decrease in Net Operating Income would be by $1,800.

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The Numerical section of the question is given as under:

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