Laro Corporation Produces and Sells a Single Product with the Following

question 208

Multiple Choice

Laro Corporation produces and sells a single product with the following characteristics:The company is currently selling 5,000 units per month. Fixed expenses are $302,000 per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Laro Corporation.Refer to the original data when answering this question. The marketing manager believes that a $7,000 increase in the monthly advertising budget would result in a 110 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 $7,000
• C)Decrease of $1,250
• D)Increase of $8,250

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Definitions:

Stars

In business, it refers to products or business units with high market growth and high market share in a competitive industry.

Growth

Describes the process of increasing in size, value, or importance, typically used in economic and business contexts to refer to the expansion of companies or economies.

Resource Investments

The allocation of resources, such as time, money, or materials, into projects or activities with the expectation of achieving returns.

Backward Integration

A business strategy where a company expands its role to fulfill tasks formerly completed by businesses up the supply chain, thereby controlling production of its supplies.