Data concerning Runnells Corporation’s single and sells a product. Data concerning that product appear below:
Per Unit | Percent of Sales | |
Selling price | $140 | 100% |
Variable expenses |
70 |
50% |
Contribution margin |
$ 70 |
50% |
The company is currently selling 5,700 units per month. Fixed expenses are $342,500 per month. The marketing manager believes that a $6,700 increase in the monthly advertising budget would result in a 120 unit increase in monthly sales. What should be the overall effect on the company’s monthly net operating income of this change? |