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Umber, Inc , produces memory enhancement kits for scanners Sales ha

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Umber, Inc., produces memory enhancement kits for
scanners. Sales have been very erratic, with some
months showing a profit and some months showing a loss.
The company\'s contribution format income
statement for the most recent month is given below:
Sales (13,400 units at $20 per unit) $ 268,000
Variable expenses $ 160,800
Fixed expenses $ 89,000
Net operating income $ 18,200
The president is convinced that a 10% reduction in the
selling price, combined with an increase of $35,000 in
the monthly advertising budget, will double unit sales.
What will be the new net operating income (loss) if
these changes are adopted?
I need solutions as well
Thank you!
Solution
What will be the new net operating income (loss) if
these changes are adopted?
Sales
482,400
($18 per unit * 26,800 units)
Variable expenses
321,600

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Umber, Inc., produces memory enhancement kits for scanners. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company\'s contribution format income statement for the most recent month is given below: Sales (13,400 units at $20 per unit) $ 268,000 Variable expenses $ 160,800 Fixed expenses $ 89,000 Net operating income $ 18,200 The president is convinced that a 10% reduction in the selling price, combined with an increase of $35,000 in the monthly advertising budget, will double unit sales. What will be the new net operating income (loss) if the ...
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