Similien Corporation Produces and Sells a Single Product

question 169

Multiple Choice

Similien Corporation produces and sells a single product. Data concerning that product appear below:
Fixed expenses are $300,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $14 and increase the advertising budget by $17,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,400 units. What should be the overall effect on the company's monthly net operating income of this change?

• A) increase of $64,200
• B) increase of $215,400
• C) decrease of $64,200
• D) decrease of $5,800

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Definitions:

Customer's Attack

Hostile or aggressive behavior by a customer towards a service provider, often as a result of dissatisfaction.

Self-Esteem

The subjective evaluation of one's own worth based on personal judgments of competence and acceptability.

Cash Prizes

Monetary awards given as recognition of achievement or winning in competition.

Surveys

A method of gathering data from a large number of respondents typically through questionnaires to research opinions, behaviors, or demographics.