Next months net operating income from the current month

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Reference no: EM13747228

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 strong financial position is strong because sales have to go down 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 $60,000 per month, sales volume next month could grow by 25% from the current sales level without the need to lower sales price.

Question: 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 240,000 B) increase by 300,000 C) increase by 800,000 D) Decrease by 60,000 E) None of above

Reference no: EM13747228

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