Winthrop Corporation produces and sells a single product. Data for that prod Sales price per unit $280 Variable cost per unit $140 Fixed expenses for the month Currently selling $640,000 12,500 units Upper management is considering using a biodegradable packaging which costs $7 more per unit but it produces less waste in the long run. Management plans to increase advertising by $8,000 in the first month to advertise this new feature to their packaging. They believe that environmentally friendly people will switch to their product resulting in an increase in sales of 5,000 units per month What should be the overall effect on the company's monthly operating income in the first month if this change is implemented?
Winthrop Corporation produces and sells a single product. Data for that prod Sales price per unit $280 Variable cost per unit $140 Fixed expenses for the month Currently selling $640,000 12,500 units Upper management is considering using a biodegradable packaging which costs $7 more per unit but it produces less waste in the long run. Management plans to increase advertising by $8,000 in the first month to advertise this new feature to their packaging. They believe that environmentally friendly people will switch to their product resulting in an increase in sales of 5,000 units per month What should be the overall effect on the company's monthly operating income in the first month if this change is implemented?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Winthrop Corporation produces and sells a single product. Data for that product are:
Sales price per unit
$280
Variable cost per unit
$140
Fixed expenses for the month
Currently selling
$640,000
12,500 units
Upper management is considering using a biodegradable packaging which costs $7 more per unit but it produces less waste in the long run. Management plans to increase advertising by $8,000 in
the first month to adverlise this new feature to their packaging. They believe that environmentally friendly people will switch to their product resulting in an increase in sales of 5,000 units per month
What should be the overall effect on the company's monthly operating income in the first month if this change is implemented?
OA. Increase of $569.500
OB. Increase of $565,500
OC. Decrease of $585,500
OD. Decrease of $569,500
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