The Marketing Department has proposed increasing the West Division's monthly advertising by $15,000 based on the belief that it
would increase that division's sales by 20%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented?
1 answer:
Answer:
Net Increase in profit is $27,000
Explanation:
* The data was missing in this question, a similar question is attached with the answer, and answer is made accordingly. Please find it.
Sales ( $350,000 x 120% ) = $420,000
- Variable cost ( 40% ) = $168,000
- Traceable fixed cost( 175000+15000) = <u>$190,000</u>
Net Profit = $62,000
Net Increase in Net Income = $62,000 - ( 350,000 - (350,000 x 40%) - 175,000 ) = 27,000
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