Hammer Company Expects the Following Results for the Next Accounting

question 90

Multiple Choice

Hammer Company expects the following results for the next accounting period: 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?
$\begin{array}{lr}\text { Sales } & \$ 240,000 \\\text { Variable costs } & \$ 135,000 \\\text { Fixed costs } & \$ 40,000 \\\text { Expected production and sales in units } & 3,000\end{array}$

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