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What is the overall effect of this change on the company

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Reference no: EM132692087

Problem 1: Data concerning Wythe Corp single product are shown. Fixed expenses are $106,000 per month. The company is currently selling 2,000 units per month. Marketing would like to cut the selling price by $15 and increase advertising budget by $5,000 per month. Marketing predicts that these two changes would increase monthly sales by 800 units. What is the overall effect of this change on the company's monthly net operating income?

Selling price $150 per unit Percent of sales 100%
Variable expenses $90 per unit Percent of sales 60%
Contribution margin $60 per unit percent of sales 40%

Reference no: EM132692087

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