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

question 135

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 believes that an $11,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

• A) decrease of $11,000
• B) increase of $11,500
• C) decrease of $500
• D) increase of $500

---

Definitions:

Common-size Balance Sheet

A financial statement displaying all line items as a percentage of total assets, facilitating comparison across companies or periods.

Total Assets

The sum of all assets owned by a business, including cash, inventory, property, and equipment, reflecting the total resources of an entity.

Comparative Financial Statements

Financial statements that present the financial position and performance of a company over multiple periods, facilitating trend analysis and comparison.

Common-size Percent

A financial analysis tool that expresses each line item on a financial statement as a percentage of a base amount, facilitating comparison across different periods or companies.