Data Concerning Massing Corporation's Single Product Appear Below: the Company

question 134

Multiple Choice

Data concerning Massing Corporation's single product appear below: The company is currently selling 9,000 units per month. Fixed expenses are $837,000 per month. The marketing manager believes that a $16,000 increase in the monthly advertising budget would result in a 150 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 $1,250
• B)decrease of $16,000
• C)decrease of $1,250
• D)increase of $17,250

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Definitions:

Profit Or Loss Test

A method used to assess the financial performance of a company by determining whether it has made a profit or incurred a loss over a certain period.

Separately Reportable

Criteria under which certain activities or financial results must be disclosed individually due to their significance within financial statements or to regulatory bodies.

Industry Segments

Specific categories within an industry that companies can be classified under based on their main business activities.

Revenue Test

A criterion used to determine whether a business segment's revenue is sufficient for it to be considered a reportable segment under financial reporting standards.