Data concerning Lemelin Corporations single product appear b

Data concerning Lemelin Corporation\'s single product appear below: Per Unit Percent of Sales Selling price $ 230 100 % Variable expenses 115 50 % Contribution margin $ 115 50 % The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month. The marketing manager believes that an $11,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. What should be the overall effect on the company\'s monthly net operating income of this change?

Multiple Choice

increase of $11,500, increase of $500, decrease of $11,000, decrease of $500

Solution

Effect on monthly sales :

So answer is b) Increase of $500