Data concerning Homme Corporation's single product appear below: Per Unit $190 114 $76 Selling price Variable expenses......... Contribution margin. Percent of Sales 100% 60% 40% The company is currently selling 2,000 units per month. Fixed expenses are $130,000 per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Homme Corporation. Refer to the original data when answering this question. The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 190 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? increase of $2,440 O decrease of $12,000 increase of $14,440 decrease of $2,440
Data concerning Homme Corporation's single product appear below: Per Unit $190 114 $76 Selling price Variable expenses......... Contribution margin. Percent of Sales 100% 60% 40% The company is currently selling 2,000 units per month. Fixed expenses are $130,000 per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Homme Corporation. Refer to the original data when answering this question. The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 190 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? increase of $2,440 O decrease of $12,000 increase of $14,440 decrease of $2,440
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Data concerning Homme Corporation's single product appear below:
Per Unit
$190
114
$76
Selling price
Variable expenses........
Contribution margin
Percent of Sales
100%
60%
40%
The company is currently selling 2,000 units per month. Fixed expenses are $130,000 per month. Consider each of the following questions independently.
This question is to be considered independently of all other questions relating to Homme Corporation. Refer to the original data when answering this question.
The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 190 unit increase in monthly sales. What should be the overall effect on the company's
monthly net operating income of this change?
increase of $2,440
decrease of $12,000
increase of $14,440
decrease of $2,440
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