Question: Data concerning Kardas Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 140 100 % Variable expenses 28 20 % Contribution

Data concerning Kardas Corporation's single product appear below:

	Per Unit		Percent of Sales
Selling price	$	140		100	%
Variable expenses		28		20	%
Contribution margin	$	112		80	%

The company is currently selling 8,000 units per month. Fixed expenses are $719,000 per month. The marketing manager believes that a $20,000 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?

Multiple Choice

decrease of $20,000
increase of $160
increase of $20,160
decrease of $160

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