Data concerning Moscowitz Corporation’s single product appear below:
<?xml:namespace prefix = v ns = “urn:schemas microsoft com:vml” /> <?xml:namespace prefix = o ns = “urn:schemas microsoft com:office:office” /> per unit percent of sales
Selling price $160 100%
Variable expenses 96 60%
Contribution margin $64 40%
Fixed expenses are $375,000 per month. The company is currently selling 8,000 units per month. The marketing manager would like to cut the selling price by $15 and increase the advertising budget by $23,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 3,100 units. What should be the overall effect on the company’s monthly net operating income of this change?
A. decrease of $128,900
B. increase of $426,500
C. increase of $8,900
D. increase of $128,900