5. The sales manager is convinced that a 13% reduction in the selling price, combined with a $77,000 increase in advertising, wouldincrease this year's unit sales by 25%.a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented?b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows:$ 2,160,0001,080,0001,080,000160,000SalesVariable expensesContribution marginFixed expensesNet operating income$ 920,000

5. The sales manager is convinced that a 13% reduction in the selling price, combined with a $77,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year?

5. The sales manager is convinced that a 13% reduction in the selling price, combined with a $77,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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