Asked by anthony triguero on May 02, 2024
Verified
This question is to be considered independently of all other questions relating to Thornbrough 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 $11.Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units.What should be the overall effect on the company's monthly net operating income of this change?
A) increase of $82,500
B) decrease of $5,500
C) decrease of $82,500
D) increase of $5,500
Unit Variable Cost
The variable cost associated with producing one additional unit of product.
Net Operating Income
A company's revenue minus its direct and indirect operating expenses, excluding taxes and interest, reflecting the profitability of its core business activities.
Monthly Sales
The total revenue generated from the sale of goods or services within a month.
- Assess the financial impact of strategic decisions on net operating income.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
D
Explanation : 
Overall net operating income will increase by $5,500
Overall net operating income will increase by $5,500
Learning Objectives
- Assess the financial impact of strategic decisions on net operating income.
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