Boenisch Corporation Produces and Sells a Single Product with the Following

question 3

Multiple Choice

Boenisch Corporation produces and sells a single product with the following characteristics: The company is currently selling 8,000 units per month. Fixed expenses are $406,000 per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Boenisch Corporation. Refer to the original data when answering this question.
The marketing manager believes that a $10,000 increase in the monthly advertising budget would result in a 170 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

• A)increase of $1,560
• B)increase of $11,560
• C)decrease of $1,560
• D)decrease of $10,000

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Definitions:

Capital

Resources made and used to produce goods and services, including tools, equipment, machinery, and buildings.

Labor

The application of both mental and physical human capacities for the generation of goods and services.

Marginal Physical Product

The additional quantity of output that is produced by using one more unit of a given input, assuming all other inputs remain constant.

Total Revenue Product

The total revenue generated by a firm from selling the output produced by an additional unit of a factor of production.