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. The marketing manager would like to cut the selling price by $7 and increase the advertising budget by $11,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 800 units. What should be the overall effect on the company's monthly net operating income of this change?

increase of $21,800

decrease of $21,800

increase of $79,400

decrease of $6,200

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