Decrease in the next month''s net operating income

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Reference no: EM13751789

Topeka Company's income statement for the current month shows that the company sold 400,000 units of its product and earned a net operating income of $600,000. Management is very pleased with the result and believes the company's financial position is strong because sales have to go down by 50% from the current level before losses can occur. Management further believes that if the company runs a new TV commercial at a cost of $80,000 per month, sales volume next month could grow by 25% from the current sales level without the need to lower the sales price. If this action is taken, what will be the increase or decrease in the next month's net operating income from the current month?

A. Increase by 800,000

B. Increase by 220,000

C. Increase by 300,000

D. Decrease by 80,000

E. None of the above

Reference no: EM13751789

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