Data concerning the single product a company sells show that selling price and variable expenses per unit are $150 and $40, respectively. Fixed expenses are $1,056,000 per month. The company is currently selling 9,900 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $10 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $102,000 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 310 units.What should be the overall effect on the company's monthly net operating income of this change?The net operating income will increase or decrease by- none of the answers listed- $31,000- $34,000- $41,500- $35,000

Solution : Given Current sales units 9900 units per month Selling price per unit $150…

Answered: Data concerning the single product a…

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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Current sales units	9900 units per month
Selling price per unit	$150
Variable cost per unit	$40
Contribution per unit	$110
Total contribution	$1089000
Fixed cost per month	$1,056,000
Net operating income	$33000