The marketing manager would like to cut the selling price

Assignment Help Accounting Basics

Reference no: EM13581340

Data concerning Homme Corporation's single product appear below:

Per Unit Percent of sales

Selling price $350 100%

Variable Expense $210 60%

Contribution Margin $140 40%

The company is currently selling 3,600 units per month.Fixed expenses are 146,000 per month.

The marketing manager would like to cut the selling price by $20 and increase the advertising budget by $16,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 700 units. What should be the overall effect on the companies monthly net operating income of this change?

A. decrease of $4,000

B. increase of 488,000

C. decrease of 360,400

D. increase of 379,600

Contribution margin

Reference no: EM13581340

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