Hammer Company Expects the Following Results for the Next Accounting

question 25

Multiple Choice

Hammer Company expects the following results for the next accounting period: $\begin{array}{lr}\text { Sales } & \$ 240,000 \\\text { Variable costs } & \$ 135,000 \\\text { Fixed costs } & \$ 40,000 \\\text { Expected production and sales in units } & 3,000\end{array}$ The sales manager believes sales could be increased by 400 units if advertising expenditures are increased by $10,000. Suppose advertising expenditures are increased and sales increase by 400 units. What will be the effect on operating income?

• A) a decrease of $4,000
• B) an increase of $4,000
• C) an increase of $22,000
• D) an increase of $30,000

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Definitions:

Ultrasound

A medical imaging technique that uses high-frequency sound waves to create images of structures within the body.

Fetus's Head

The head part of a fetus, which is the developing stage of a vertebrate, especially a human, in the womb.

Multiple Pregnancies

A pregnancy involving more than one fetus, e.g., twins or triplets.

Chorionic Villus Sampling

A prenatal test in which a sample of chorionic villi is taken from the placenta for genetic testing, helping to detect birth defects and genetic diseases early in pregnancy.