Data Concerning Kardas Corporation's Single Product Appear Below

question 167

Multiple Choice

Data concerning Kardas Corporation's single product appear below:
The company is currently selling 8,000 units per month.Fixed expenses are $719,000 per month.The marketing manager believes that a $20,000 increase in the monthly advertising budget would result in a 180 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 $160
• B) increase of $20,160
• C) decrease of $20,000
• D) increase of $160

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Definitions:

Product Class

A broad category of goods or services that share similar characteristics or serve similar purposes.

Selective Demand

The demand for a specific brand or product rather than the category as a whole, often influenced by advertising and consumer preferences.

Competitors

Entities that operate in the same or similar industry and offer comparable products or services, thereby vying for the same customer base.

Skimming Pricing Strategy

A pricing approach where a product is initially set at a high price before gradually lowering it over time to capture different segments of the market.