Answer:
The company's monthly net operating income increases $4,600
Explanation:
The company is currently selling 6,000 units per month:
Total sales = $130 x 6,000 = $780,000
Total Variable expenses = $78 x 6,000 = $468,000
Net operating income = Total sales - Total Variable expenses - Fixed expenses = $780,000 - $468,000 - $184,000 = $128,000
If Kuzio Corporation increases in the monthly advertising budget of $5,800:
Total sales = $130 x 6,200 = $806,000
Total Variable expenses = $78 x 6,200 = $483,600
Fixed expenses = $184,000 + $5,800 = $189,800
Net operating income = $806,000 - $483,600 - $189,800 = $132,600
The company's monthly net operating income increases = $132,600 - $128,000 = $4,600
