Asked by Scarlet Melliz on May 02, 2024
Verified
This question is to be considered independently of all other questions relating to Houpe Corporation.Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $5.Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 300 units.What should be the overall effect on the company's monthly net operating income of this change?
A) decrease of $2,100
B) decrease of $27,900
C) increase of $2,100
D) increase of $27,900
Unit Variable Cost
The variable cost associated with producing one additional unit of a product.
Monthly Sales
Monthly sales are the total sales revenue a company generates within a specific month.
- Scrutinize the outcomes of transforming marketing strategies, in particular, the adjustment in advertising funding and sales commission schemes, on net operating income.
- Appreciate the impact of incorporating new components or features on product costs and monthly sales.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
A
Explanation : 
Overall net operating income will decrease by $2,100
Overall net operating income will decrease by $2,100
Learning Objectives
- Scrutinize the outcomes of transforming marketing strategies, in particular, the adjustment in advertising funding and sales commission schemes, on net operating income.
- Appreciate the impact of incorporating new components or features on product costs and monthly sales.
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