Asked by mallika persaud on Jun 29, 2024
Verified
Data concerning Kardas Corporation's single product appear below: 
The company is currently selling 8,000 units per month.Fixed expenses are $719,000 per month.The marketing manager believes that a $20,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?
A) decrease of $160
B) increase of $20,160
C) decrease of $20,000
D) increase of $160
Monthly Net Operating Income
Net operating income calculated on a monthly basis, indicating the profitability of business operations within that month.
Fixed Expenses
Costs that do not change with the level of production or sales, such as rent and salaries, remaining constant over a period.
Monthly Advertising Budget
A planned amount of money dedicated to promoting a company's products or services for a month.
- Calculate and interpret the effect of advertising and sales commissions on net operating income.
Verified Answer
Net operating income would increase by $160.
Learning Objectives
- Calculate and interpret the effect of advertising and sales commissions on net operating income.
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