Data Concerning Lemelin Corporation's Single Product Appear Below: the Company

question 249

Multiple Choice

Data concerning Lemelin Corporation's single product appear below: The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month.
The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $20 per unit. In exchange, the sales staff would accept a decrease in their salaries of $113,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 300 units. What should be the overall effect on the company's monthly net operating income of this change?

• A) decrease of $224,500
• B) increase of $107,000
• C) increase of $1,500
• D) increase of $806,500

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Definitions:

Assimilation

The cognitive process by which a person integrates new ideas, experiences, or information into existing cognitive structures.

Schema

Cognitive structures or frameworks that help organize and interpret information, forming the basis of knowledge and understanding.

Preoperational

A stage in Piaget's theory of cognitive development, during which a child from about 2 to 7 years old begins to engage in symbolic play but does not yet understand concrete logic.

Formal Operational

The final stage of cognitive development (as per Jean Piaget's theory), characterized by the ability to think abstractly, logically, and systematically.