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Kuzio Corporation produces and sells a single product. Data concerning that product appear below:
Kuzio Corporation produces and sells a single product. Data concerning that product appear below:Per Unit Percent of Sales
Selling price $220 100%
Variable expenses 88 40%
Contribution margin $132 60%
The company is currently selling 6,500 units per month. Fixed expenses are $183,000 per month. The marketing manager believes that an $6,400 increase in the monthly advertising budget would result in a 140 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
Final answer:An increase of $6,400 in the monthlyadvertising budget,resulting in an increase of 140 units in monthly sales, would raise Kuzio Corporation's monthly net income by $12,080.Explanation:The overall effect on Kuzio Corporation's monthly net operating income depends on the additional sales' contribution margin and the increase in advertising spending. Each additional unit sold contributes $132 (contribution margin per unit) to cover fixed expenses and profit. Multiplying the per-unit contribution margin by the additional number of units (140) gives us any extra monthly contribution of $18,480. However, we must take into account the increase in advertising budget of $6,400. So, the overall effect on the company's monthly net income would be $18,480 - $6,400= $12,080 increase.Learn more about Net Operating Income here:brainly.com/question/31106289#SPJ3...