Joly Corporation Produces and Sells a Single Product

question 46

Multiple Choice

Joly Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $511,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $16 and increase the advertising budget by $33,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 800 units. What should be the overall effect on the company's monthly net operating income of this change?

• A)decrease of $59,800
• B)increase of $59,800
• C)increase of $130,200
• D)decrease of $20,200

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Definitions:

Serotonin

A chemical messenger that plays a crucial role in regulating mood, digestive functions, and sleep patterns.

Carbohydrates

Organic compounds consisting of carbon, hydrogen, and oxygen atoms, crucial for providing energy to the body's cells, especially the brain and muscles.

Norepinephrine

A neurotransmitter and hormone involved in the body's fight or flight response, affecting mood and arousal.

Settling Point

A theory suggesting that weight tends to stabilize around a point at which there's a balance between energy intake and expenditure.