Operating results for Division A of Alpha Company during 2019 are as follows: Sales $560,000 Cost of goods sold 347,200 Gross profit Direct expenses Common expenses Total expenses Net income 212,800 37,800 63,000 100,800 $112,000 If Division A would maintain the same quantity of product sold while raising selling prices by 14.000000000000002%, increasing direct labor costs by $28,000 and implementing a new marketing campaign at a cost of $14,000, what would be the effect on the Division's net income? (Ignore income taxes in your calculations.) Select one: O a. Net income would increase by $36,400 O b. Net income would increase by $28,000 O c. Net income would decrease by $36,400 O d. Net income would increase by $42,000 O e. None of these options are correct.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Operating results for Division A of Alpha Company during 2019 are as follows:
Sales
$560,000
Cost of goods sold
347,200
Gross profit
212,800
Direct expenses
37,800
Common expenses
63,000
100,800
$112,000
Total expenses
Net income
If Division A would maintain the same quantity of product sold while raising selling prices by 14.000000000000002%, increasing direct labor costs by $28,000 and implementing a new
marketing campaign at a cost of $14,000, what would be the effect on the Division's net income? (Ignore income taxes in your calculations.)
Select one:
O a. Net income would increase by $36,400
b. Net income would increase by $28,000
c. Net income would decrease by $36,400
d. Net income would increase by $42,000
e. None of these options are correct.
O
O
O
Transcribed Image Text:Operating results for Division A of Alpha Company during 2019 are as follows: Sales $560,000 Cost of goods sold 347,200 Gross profit 212,800 Direct expenses 37,800 Common expenses 63,000 100,800 $112,000 Total expenses Net income If Division A would maintain the same quantity of product sold while raising selling prices by 14.000000000000002%, increasing direct labor costs by $28,000 and implementing a new marketing campaign at a cost of $14,000, what would be the effect on the Division's net income? (Ignore income taxes in your calculations.) Select one: O a. Net income would increase by $36,400 b. Net income would increase by $28,000 c. Net income would decrease by $36,400 d. Net income would increase by $42,000 e. None of these options are correct. O O O
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