Correct Answer:
Requirement 1A:
Net operating income Decrease by $ 7200
Requirement 1B:
The Advertising budget should not be increased.
Working:
units |
4600 |
4700 |
Change |
|
A |
Sales revenue |
$ 368,000.00 |
$ 376,000.00 |
|
B |
Less: Variable cos |
$ 239,200.00 |
$ 244,400.00 |
|
C=A-B |
Contribution margin |
$ 128,800.00 |
$ 131,600.00 |
|
D |
Fixed cost |
$ 76,000.00 |
$ 86,000.00 |
|
E=C-D |
net operating income |
$ 52,800.00 |
$ 45,600.00 |
$ (7,200.00) |
End of Answer.
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