Data Concerning Amburn Corporation's Single Product Appear Below: Fixed

question 18

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:

Economy

The system by which a country's money and goods are produced and used, encompassing production, distribution, and consumption.

Tax-Transfer System

The mechanism through which governments collect taxes from individuals and businesses and redistribute the revenue in the form of government spending or transfers.

Progressive

Relating to progressive policies or taxes, which are designed to have a greater impact on those who are able to pay more.

U.S. Tax System

A system governing how taxes are collected from individuals and businesses by the federal, state, and local governments in the United States, covering income, sales, property, and other taxes.