Wertman Corporation Produces and Sells a Single Product with the Following

question 173

Multiple Choice

Wertman Corporation produces and sells a single product with the following characteristics: The company is currently selling 3,000 units per month. Fixed expenses are $215,000 per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Wertman Corporation. Refer to the original data when answering this question.
Management is considering using a new component that would increase the unit variable cost by $5. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 200 units. What should be the overall effect on the company's monthly net operating income of this change?

• A) increase of $15,800
• B) decrease of $15,800
• C) increase of $800
• D) decrease of $800

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Definitions:

Workaholism

An imbalanced preoccupation with work at the expense of home and personal life satisfaction.

Temporal Pressure

The stress or urgency felt due to tight schedules, deadlines, or the need to make decisions or complete tasks quickly.

Child Rearing

The process of supporting and promoting the physical, emotional, social, and intellectual development of a child from infancy to adulthood.

Parental Care

The actions and behaviors of parents to ensure the welfare, protection, and development of their offspring.