A Sales Manager Has Projected That an Increase in the Monthly

question 38

Multiple Choice

A sales manager has projected that an increase in the monthly advertising budget to $25,000 will increase monthly sales from 10,000 units to 12,000 units. Each unit sells for
$50 with total variable costs per unit of $40. Monthly fixed expenses, including the current advertising costs of $5,000, total $20,000. Given the above data, what will be the expected impact on net income?

• A)An increase of $5,000.
• B)A decrease of $5,000.
• C)A decrease of $110,000.
• D)No change.

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Definitions:

Expectancy Model

A psychological theory suggesting that people are motivated to act in certain ways based on their expectations of the outcome and the value they place on that outcome.

Perceived Relationship

The subjective interpretation or understanding an individual has of their relationship with others, which may not align with reality.

Effort

The use of physical or mental energy to achieve a task, goal, or outcome, often measured by the level of hard work or intensity applied.

Pay

Compensation received by an employee for their work, including wages, salaries, and bonuses.