Asked by Jason Brownlee on Apr 27, 2024
Verified
Cobble Corporation produces and sells a single product.Data concerning that product appear below: 
Fixed expenses are $499,000 per month.The company is currently selling 5,000 units per month.The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $33,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 900 units.What should be the overall effect on the company's monthly net operating income of this change?
A) increase of $56,100
B) decrease of $8,900
C) increase of $99,300
D) decrease of $56,100
Operating Income
Income generated from the core operations of a business, excluding non-operating revenue and expenses.
Selling Price
The charge or fee extended to the purchaser for a product or service, typically aiming to cover costs and generate profit.
Advertising Budget
The amount of money allocated for promoting a product, service, or brand during a specific period.
- Analyze the effects of pricing and advertising changes on the break-even point and net operating income.
Verified Answer
KP
Net operating income decreases by $8,900.
Learning Objectives
- Analyze the effects of pricing and advertising changes on the break-even point and net operating income.