Due to erratic sales of its sole product, a high capacity battery for laptop computers, Salcedo Company has been experiencing difficulty for some time. The company's income statement for the most recent month is given below: Sales (19,500 units @ P500) P9,750,000 Less variable expenses (7,995,000) Contribution margin 1,755,000 Less fixed expenses 1,800,000 Net loss P (45,000) The president believes that a P160,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an P800,000 increase in monthly sales. If the president is right, what will be the effect on the company's monthly net income or loss? (Indicate whether the effect would be increase or decrease, e.g. 1000 decrease, 1000 increase)
Due to erratic sales of its sole product, a high capacity battery for laptop computers, Salcedo Company has been experiencing difficulty for some time. The company's income statement for the most recent month is given below:
Sales (19,500 units @ P500) P9,750,000
Less variable expenses (7,995,000)
Contribution margin 1,755,000
Less fixed expenses 1,800,000
Net loss P (45,000)
The president believes that a P160,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an P800,000 increase in monthly sales. If the president is right, what will be the effect on the company's monthly net income or loss? (Indicate whether the effect would be increase or decrease, e.g. 1000 decrease, 1000 increase)
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