Question: `1)Data concerning Lancaster Corporation's single product appear below: Per Unit Percent of Sales Selling Price $200 100% Variable Expenses $60 30% Contribution Margin $140 70%

`1)Data concerning Lancaster Corporation's single product appear below:

	Per Unit	Percent of Sales
Selling Price	$200	100%
Variable Expenses	$60	30%
Contribution Margin	$140	70%

Fixed expenses are $105,000 per month. The company is currently selling 1,000 units per month. Management is considering using a new component that would increase the unit variable cost by $44. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change?

Decrease of $5,600

Decrease of $38,400

Increase of $38,400

Increase of $5,600

2)Data concerning Runnells Corporation's single product appear below:

	Per Unit	% of Sales
Selling Price......	$160	100%
Variable Expenses.......	$80	50%
Contribution Margin.......	$80	50%

The company is currently selling 6,000 units per month. Fixed expenses are $424,000 per month. The marketing manager believes that a $7,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Increase of $8,000

Decrease of $7,000

Increase of $1,000

Decrease of $1,000

3)If our fixed expenses are $20,000, and sales are $550,000, and our unit selling price is $55, and our unit variable expense is $44; what would profits be?

$130,000

$530,000

$90,000

$420,000

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