Answered

Get reliable answers to your questions at Westonci.ca, where our knowledgeable community is always ready to help. Find reliable answers to your questions from a wide community of knowledgeable experts on our user-friendly Q&A platform. Get quick and reliable solutions to your questions from a community of experienced experts on our platform.

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,400, the monthly sales volume increases by 100 units, and the total monthly sales increase by $9,500? 1-b. Should the advertising budget be increased?

Sagot :

Parrain

Answer:

a. Income before advertising budget increase:

= Contribution margin - Fixed costs

= (38 * 3,600) - 79,000

= $57,800

Income after advertising budget increases:

= Sales - Variable expenses - Fixed expenses

Sales = (3,600 + 100 units) * 95 per unit

= $351,500

Variable expenses = 60% * 351,500

= $210,900

Fixed expenses = 79,000 + 8,400 advertising

= $87,400

Income = 351,500 - 210,900 - 87,400

= $53,200

b. Income decreased with the increase in advertising so Advertising budget should not be increased.

View image Parrain
Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Thank you for visiting Westonci.ca, your go-to source for reliable answers. Come back soon for more expert insights.