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Per Unit Percent of Sales
Selling price...... $150 100%Variable expenses 90 60%Contribution margin...... $ 60 40%
Question 1: Data concerning Wythe Corporation's single product are shown. Fixed expenses are $106,000 per month. The company is currently selling 2,000 units per month. The marketing manager would like to cut the selling price by $15 and increase the advertisingbudget by $5,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 800 units. What should be the overall effect of this change on the company's monthly net operating income?
A. Decrease of $31,000
B. Increase of $103,000
C. Increase of $1,000
D. Increase of $31,000
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