Laro Corporation Produces and Sells a Single Product with the Following

question 142

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 would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $9 per unit.In exchange,the sales staff would accept a decrease in their salaries of $40,000 per month.(This is the company's savings for the entire sales staff. ) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 100 units.What should be the overall effect on the company's monthly net operating income of this change?

• A)Increase of $376,600
• B)Increase of $1,600
• C)Decrease of $78,400
• D)Increase of $39,100

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Definitions:

Extranet

A private network that uses Internet technology and public telecommunication systems to securely share part of a business's information or operations with suppliers, vendors, partners, customers, or other businesses.

Enterprise Network

An organization’s network, which is composed of interconnected multiple LANs and WANs.

Traditional Network

A communication framework that relies on physical infrastructure and basic software for connectivity and data transfer among users.

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Software-Defined Networking, a networking approach that allows networks to be intelligently and centrally controlled, or 'programmed,' using software applications.