Evans Company Has Estimated the Following Amounts for Its Next

question 35

Multiple Choice

Evans Company has estimated the following amounts for its next fiscal year: $$\begin{array} { | l | r | } \hline \text { Total fixed expenses } & \$ 832,500 \\\hline \text { Sale price per unit } & 40 \\\hline \text { Variable expenses per unit } & 25 \\\hline\end{array}$$ If the company spends an additional $30,000 on advertising, sales volume would increase by 2,500 units. What effect will this decision have on the operating income of Evans?

• A) Operating income will decrease by $62,500.
• B) Operating income will increase by $7,500.
• C) Operating income will increase by $70,000
• D) Operating income will increase by $37,500.

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