Data Concerning Lancaster Corporation's Single Product Appear Below: Fixed

question 113

Multiple Choice

Data concerning Lancaster Corporation's single product appear below: Fixed expenses are $105,000 per month. The company is currently selling 1,000 units per month. Management is considering using a new component that would increase the unit variable cost by $44. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change?

• A)decrease of $38,400
• B)decrease of $5,600
• C)increase of $5,600
• D)increase of $38,400

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Definitions:

Health Care Costs

The expenses associated with medical care, including hospital stays, physician services, prescription drugs, and health procedures.

Aging Population

A demographic trend characterized by an increase in the median age of a population due to declining fertility rates and rising life expectancy.

Workers' Compensation Fund

A pool of funds used to provide financial assistance and medical care to employees who are injured or become ill as a direct result of their job.

Contributions

imply donations or payments made towards a particular cause, group, or effort, or the act of giving towards something.