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Katena32 [7]
3 years ago
5

Kuzio Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Sell

ing price $ 150 100 % Variable expenses 60 40 % Contribution margin $ 90 60 % The company is currently selling 7,000 units per month. Fixed expenses are $209,000 per month. The marketing manager believes that a $7,100 increase in the monthly advertising budget would result in a 190 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
Business
1 answer:
Nana76 [90]3 years ago
5 0

Answer:

$10,000 increase in the net operating income

Explanation:

The computation of the overall impact is shown below:

= Change in contribution margin units - increase in the monthly advertising budget

= $17,100 - $7,100

= $10,000

The change in contribution margin units is computed below:

= New sales units × Contribution margin per unit

= 190 units × $90

= $17,100

And, the increase in the monthly advertising budget is a fixed expenses or fixed cost

Sales - variable cost = Contribution

Contribution margin - fixed expenses = Net operating income

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5 0
3 years ago
The following information is available for Moiz Company:________.
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      To Sales Discounts  $7,000

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      To Interest Exp  $19,000

      To Salaries & Wages $55,000

      To Utility  $18,000

      To Depreciation $7,000

(Being closing of expenses accounts are closed)

3. Income Summary $80,000

      To Retained Earning $80,000

(Being profit is recorded)

4. Retained Earning $30,000

        To Dividends  $30,000

(Being closing of dividend is recorded)

8 0
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Please check the attached image for the table explaining how the answer was gotten.

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