Data Concerning Amburn Corporation's Single Product Appear Below

question 187

Multiple Choice

Data concerning Amburn Corporation's single product appear below:
Fixed expenses are $179,000 per month. The company is currently selling 3,000 units per month. The marketing manager would like to cut the selling price by $9 and increase the advertising budget by $12,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 500 units. What should be the overall effect on the company's monthly net operating income of this change?

• A) decrease of $7,500
• B) increase of $19,500
• C) decrease of $19,500
• D) increase of $43,500

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Definitions:

Compensation

Payment or reward given to someone in exchange for their services, loss, or suffering, often in the form of money, benefits, or other valuable considerations.

Quorum

A quorum is the minimum number of members of a deliberative assembly (such as a board or committee) necessary to conduct the business of that group.

Majority Vote

A voting requirement where more than half of the votes cast by persons entitled to vote is needed to make a decision or pass a resolution.

MBCA

Model Business Corporation Act, a set of model laws implemented by some states to regulate the affairs of corporations.