Question - Ringstaff Corporation produces and sells a single product. Data concerning that product appear below:
per unit percent of sales
selling price............... $150 100%
variable expenses........... 30 20%
contribution margin......... $120 80%
The company is currently selling 7,000 units per month. Fixed expenses are $615,000 per month. The marketing manager believes that a $21,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
a. decrease of $21,000
b. decrease of $600
c. increase of $600
d. increase of $21,600