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Brady Corporation produces and sells a single product
Brady Corporation produces and sells a single product. Data concerning that product appear below:
|
Per Unit |
Percent of Sales |
||||||
|
Selling price |
$ |
120 |
100 |
% |
|||
|
Variable expenses |
24 |
20 |
% |
||||
|
Contribution margin |
$ |
96 |
80 |
% |
|||
Fixed expenses are $350,000 per month. The company is currently selling 4,000 units per month.
Required:
The marketing manager would like to cut the selling price by $8 and increase the advertising budget by $22,500 per month. The marketing manager predicts that these two changes would increase monthly sales by 300 units. What should be the overall effect on the company's monthly net operating income of this change?
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