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What should be the overall effect on net operating income

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Reference no: EM132798250

Question - Roy Corporation's financial data is reported as follows:

Per Unit Percent of Sales

Selling price $140 100%

Variable expenses 28 20%

Contribution margin $112 80%

The monthly sales of Roy Corporation is 8,000 units. The company also incurres $719,000 fixed expenses per month. The CEO of the company asserts that a $20,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? Show your calculations.

Reference no: EM132798250

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