Problem based on monthly advertising budget


Zeeb Corporation produces and sells a single product. Data concerning that product appear below:

Per Unit Percent
of Sales
Selling price $ 150 100%
Variable expenses 60 40%
Contribution margin $ 90 60%

Fixed expenses are $355,000 per month. The company is currently selling 5,000 units per month.

The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 160 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: Problem based on monthly advertising budget
Reference No:- TGS052237

Expected delivery within 24 Hours