Question: Data concerning Marchman Corporation's single product appear below: Per Unit Percent of Sales Selling price $120 100% Variable expenses 72 60% Contribution margin $48 40%

Data concerning Marchman Corporation's single product appear below:

	Per Unit	Percent of Sales
Selling price	$120	100%
Variable expenses	72	60%
Contribution margin	$48	40%

The company is currently selling 4,000 units per month. Fixed expenses are $166,000 per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Marchman Corporation. Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $2. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 200 units. What should be the overall effect on the company's monthly net operating income of this change?

options

A	decrease of $9,200
B	increase of $1,200
C	decrease of $1,200
D	increase of $9,200

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