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Broken Arrow Inc Fixed Costs Are $226,000 Per Month

question 9

Essay

Broken Arrow Inc.produces and sells a single product.Data concerning that product appear below:
 Per Unit  Percent of Sales  Selling price $190100% Variable costs 5730% Contribution margin $13370%\begin{array} { | l | r | r | } \hline & \text { Per Unit } & \text { Percent of Sales } \\\hline \text { Selling price } & \$ 190 & 100 \% \\\hline \text { Variable costs } & \underline { 57} & \underline { 30 \%} \\\hline \text { Contribution margin } & \$ 133 & 70 \% \\\hline\end{array}
Fixed costs are $226,000 per month.The company is currently selling 2,000 units per month.Required:
The marketing manager would like to cut the selling price by $12 and increase the advertising budget by $13,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 200 units.What should be the overall effect on the company's monthly operating profit of these changes?

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Definitions:

Health Maintenance

Activities and practices aimed at preventing disease, prolonging life, and promoting physical and mental health.

Persistent Mental Illness

Long-term mental health conditions that affect a person's thinking, feeling, mood, and behavior, requiring ongoing management.

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A neurodevelopmental disorder affecting adults, characterized by inattention, hyperactivity, and impulsivity.

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Lack of focus or concentration on tasks or the environment, often leading to mistakes or incomplete work.

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