Question

The Clyde Corporation's variable expenses are 40% of sales. Clyde Corporation is contemplating an advertising campaign that will cost $27,000. If sales increase by $77,000, the company's net operating income will increase by:

Answer 1

Answer:

Increase in income= $19,200

Explanation:

Giving the following information:

Clyde Corporation's variable expenses are 40% of sales. Clyde Corporation is contemplating an advertising campaign that will cost $27,000.

Increase in income= increase in sales - increase in variable cost -  marketing campaign

Increase in income= 77,000 - (77,000*0.40) - 27,000= $19,200