The marketing manager would like to cut the selling price

Reference no: EM13581371

Data concerning Homme Corporation's single product appear below:
Per unit Percent of sales
Selling price $350 100%

variable expenses 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 two changes will increase monthly sales by 700 units. What should be the overall effect on the company's monthly net operating income of this change?

Reference no: EM13581371

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