Bohlen Corporation Produces and Sells a Single Product

question 125

Multiple Choice

Bohlen Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $716,000 per month. The company is currently selling 6,000 units per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Bohlen Corporation. Refer to the original data when answering this question.
The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $16 per unit. In exchange, the sales staff would accept a decrease in their salaries of $84,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 600 units. What should be the overall effect on the company's monthly net operating income of this change?

• A)increase of $74,400
• B)increase of $64,800
• C)decrease of $103,200
• D)increase of $928,800

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Definitions:

Upstream Promoter Elements

DNA sequences located before (upstream of) the coding sequence of a gene that help initiate transcription by binding specific proteins.

Enhancers

Regulatory DNA sequences that enhance gene transcription; can be located long distances away from the actual coding regions of a gene.

Tryptophan Operon

A cluster of genes in bacteria involved in the production of the amino acid tryptophan, regulated by feedback inhibition.

Repressor Gene

A gene that encodes a protein which can bind to an operator or promoter sequences to prevent transcription of a certain gene.