McPherson Company Is Facing a $6 Increase in the Variable

question 79

Multiple Choice

McPherson Company is facing a $6 increase in the variable cost of producing one of its products for the upcoming year.As a result,the sales manager has made a proposal to increase the selling price of the product while increasing the advertising budget at the same time.The price increase will lower sales volume,but the other changes may help the company maintain its profit margins.McPherson has provided the following information regarding the current year results and the proposal made by the sales manager: Relative to the current year,the sales manager's proposal will ________.

• A)decrease operating income by $90,000
• B)increase contribution margin by $90,000
• C)decrease the unit breakeven point
• D)decrease operating income by $110,000

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Definitions:

Television Home Shopping

A retail format where products are marketed and sold directly to consumers through television channels, inviting viewers to make purchases from home.

Paper Costs

The expenditures associated with acquiring paper, often relevant in printing, publishing, and stationary contexts.

Postal Rates

The charges or fees associated with sending mail and packages through the postal service.

Declined

Refers to a decrease or rejection in amount, quality, or intensity.