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

question 171

Multiple Choice

Data concerning Marchman Corporation's single product appear below: The company is currently selling 4,000 units per month. Fixed expenses are $166,000 per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Marchman Corporation. Refer to the original data when answering this question.
The marketing manager believes that a $6,000 increase in the monthly advertising budget would result in a 130 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

• A)decrease of $240
• B)decrease of $6,000
• C)increase of $240
• D)increase of $6,240

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Definitions:

Sales Forecast

An estimate of the amount of sales that a company expects to achieve in a certain period.

Discount Rate

The interest rate used to discount future cash flow to its present value, reflecting the time value of money and risk of the cash flow.

Project Life

The total duration from the initiation to the completion of a project, covering all stages of development and execution.

Accounting Break-Even

The point at which total revenues equal total expenses, and there is no profit or loss, specifically from an accounting perspective that includes non-cash expenses.