Answered

Welcome to Westonci.ca, where curiosity meets expertise. Ask any question and receive fast, accurate answers from our knowledgeable community. Discover a wealth of knowledge from professionals across various disciplines on our user-friendly Q&A platform. Get immediate and reliable solutions to your questions from a community of experienced professionals 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
Thank you for visiting our platform. We hope you found the answers you were looking for. Come back anytime you need more information. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Find reliable answers at Westonci.ca. Visit us again for the latest updates and expert advice.