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Compute the monthly increase in operating income

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Reference no: EM132953940

Problem 1: Montclair Company earns an average contribution margin ratio of 40% on its sales. The local store manager estimates that he can increase monthly sales volume by $45,000 by spending an additional $7,000 per month for direct mail advertising. Compute the monthly increase in operating income if the manager's estimate about the increased sales volume is accurate.

Multiple Choice

Option 1: $23,000
Option 2: $18,000
Option 3: $16,000
Option 4: $11,000

Reference no: EM132953940

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