Question: Data for Fatima Corporation are shown below: Total Per unit Sales $427,500 95 Variable expenses $238,500 53 Contribution margin $189,000 42 Fixed expenses are $307,000

Data for Fatima Corporation are shown below:

	Total	Per unit
Sales	$427,500	95
Variable expenses	$238,500	53
Contribution margin	$189,000	42

Fixed expenses are $307,000 per month. The company is currently selling 4,500 units per month. Required: Management is considering using a new component that would increase the unit variable cost by $2. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 9%.

What should be the overall effect on the company's monthly net operating income of this change of variable expenses per unit? If there is a decrease put a minus sign next to the number.

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