Question

How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,600, the monthly sales volume increases by 100 units, and the total monthly sales increase by $6,000

Answer 1

Answer:

I could not find the exact missing details for your question so I will use a similar one that you can reference. See attached.

Fixed expenses will remain the same and only advertising and sales increased so;

Increase (decrease) in Net Operating income = Increase in sales * Contribution margin ratio - increase in expenses (advertising)

= 16,000 * 40% - 8,200

= 6,400 - 8,200

= -$1,800

Decrease of $1,800